Autumn Budget 2025: what it means for you

Chancellor Rachel Reeves delivered the Autumn Budget today, and our experts across BW and Howden are unpacking what this means for employers, employees, trustees, and the wider industry ahead of our live webinar.

SMEs need certainty and support, not more complexity

Rob Kennedy, CEO, Howden UK&I

"SMEs are the backbone of the UK economy and vital in providing employment across the UK’s town, cities and local communities. The government must address the critical need to invest in enterprise, ensure stability and certainty for businesses still adapting to the measures from the 2024 Budget, and protect our flexible labour market. On top of increases in NICs last year, the rise in the minimum wage and lack of bold, pro-growth tax measures creates a complex landscape for businesses to navigate, rather than a simpler route to growth.

The steps to lower business rates for retail, leisure and hospitality are a positive step towards revitalising our ailing high streets. But the Government is mistaken in thinking it is supporting new business in the UK with its tax exceptions to fuel duty yet increasing the cost per mile for EVs that the government is encouraging drivers to adopt."

Despite the new cap, salary sacrifice remains a vital, underused tool for boosting pensions, saving NI, and supporting employees

Cheryl Brennan, Managing Director at Howden Employee Benefits:

"While the cap on how much staff can pay into pensions using salary sacrifice is not an outcome of the Budget that we welcome, even with the changes announced today, employers and employees should continue to make use of what is available and implement it now, if they have not already, especially given changes won’t take effect until April 2029.

"Salary sacrifice is a powerful tool, but it remains significantly underutilised. Our recent Employee Benefits research shows that 68% of UK SMEs still don’t use pension salary sacrifice. For companies, it means missing out on potential national insurance savings that could be reinvested into their people and growth, while for employees, it can mean reduced take-home pay and lower pension contributions, impacting financial security.

"During tough economic times, employers should pull every available lever to support employees, and salary sacrifice remains one of those levers."

The salary sacrifice cut boosts NI but weakens pensions, adds employer costs, and hinders parents’ return to work

Mark Futcher, Partner and Head of DC Pensions at Barnett Waddingham: 

“The Chancellor’s decision to cut salary sacrifice savings to pensions will reverberate across workplaces. While it may raise extra NI revenue, it removes one of the most effective ways people boost their pension savings. With adequacy levels already worryingly low, this change will hit average earners hardest and increase cost pressures for employers at a time when budgets are stretched. It also runs against the aims of the new Pension Commission, which is focused on strengthening long term saving, not undermining it.

"And salary sacrifice goes beyond pensions. Parents use it as a convenient way to retain access to child benefits and funded childcare when they or a partner is deciding whether to stay in or return to work. The proposed approach where people can still sacrifice more but only get savings on the first £2,000 may cause confusion as to what the limit is. This could present a barrier to people re-entering the workforce after periods of leave, worsening gender pay and pensions gaps.

"Sudden tax and insurance changes like these only create a lose-lose scenario for employers and employees – which we’re seeing play out in the employment data across the UK. We can only hope the Government recognises the damage this could cause and turns its attention to policies that make it easier for ordinary working people to build a secure retirement, not harder.”

The Budget lacks the bold growth-focused policies markets are seeking, leaving Sterling and Gilts largely unmoved

Matt Tickle, Partner and Chief Investment Officer (CIO) at Barnett Waddingham:

“Despite an immediate FTSE dip, the market reaction to the leaked OBR document is pretty subdued. Some front loading of welfare spending and longer-term tax rises might generate headlines for a few weeks, but none of the fiscal changes look substantial enough to impact the Gilt or Sterling markets. 

“Though there’s not been a negative shock, the Chancellor’s announcements aren’t set to bolster market sentiment either. The markets are crying out for policies which truly support economic growth – de-regulation, investment in R&D, and pro-worker pro-business taxation. This Budget didn’t do that. The three year stamp duty holiday on newly listed UK companies is a positive start, but stamp duty on UK shares remains an anomaly disadvantaging the UK versus other countries which should be resolved. The tax hike on dividends seems at odds with the ISA changes, which is indicative of a wider challenge this Government doesn’t seem able to meet; to boost the attractiveness of UK assets without threatening institutional and retail investors with mandation."

Pension reforms provide long-overdue increases for pre-1997 PPF pensions and create opportunities for well-funded DB schemes

Ian Mills, Partner and Head of DB Endgame Strategy at Barnett Waddingham:

PPF to provide increases for pre-1997 pensions

"The Chancellor’s announcement that the PPF will pay increases to most pre-1997 pensions will be welcomed by pensioners whose employers have become insolvent. Since the PPF’s launch in 2005, pensions accrued prior to 1997 have received no increases. Over the intervening period, inflation has been persistent and occasionally very high, and so these people’s pensions have fallen significantly in real terms – while the PPF’s financial position has improved to the extent that it has been able to cut levies to zero. It seems fair and reasonable that these pensions are now provided with inflationary increases, putting more money in the pocket of some pensioners as they navigate the cost of living crisis.

Trustees of DB schemes, especially those currently in PPF assessment, will no doubt be keen to learn more about how exactly this will be implemented, and what it will means for their own schemes."

Opportunities for surplus payments

Budget changes to allow well-funded DB schemes to pay surplus funds to scheme members over retirement age from 2027 will likely have flown under the radar for many. While a seemingly small change, it's an amendment that may now encourage more schemes to run-on. But perhaps most importantly, it gives companies another option beyond increasing pension liabilities - something that most are actively trying to avoid to minimise their DB pension risk.

Running-on is typically most appealing when most liabilities are still active, so the absence of a mechanism to share surplus with younger members is a missed opportunity. With the Government estimating up to £160bn of surpluses in scope, getting these reforms right will really matter.

Want to know more about what this means for you? 

Cutting through the noise to understand what the Budget really means for your organisation, people, and pension and benefit schemes can be hard. That’s why BW and Howden experts hosted a webinar to clearly break down the key outcomes, implications, and what you need to do next. Watch on-demand today.

Our experts will continue monitoring the outcomes and provide further insights on LinkedIn.