NI Contributions Slashed but Employees Must Work for Longer
In his autumn statement, George Osborne announced plans cancel employers’ national insurance contributions for workers below the age of 21, but warned that young people now entering the jobs market may have to wait until the age of 69 to receive a state pension.
Set to take effect in April, 2015, more than 1.5 million young workers earning less than £813 per week will be affected by the cut in National Insurance charges, which currently stand at up to 13.8%.
The move could save businesses £465 million in the first year, rising to £495 million in 2016-17, £520 million in 2017-18 and £530 million in 2018-2019.
“We’re not going to leave young people behind as the economy grows,” said.
“We are going to have a responsible recovery for all. The cost for a business of employing a young person on a salary of £12,000 will fall by over £500.”
The move will be partly paid for by increasing the state retirement age to 68 in the mid-2030s and to 69 by the late-2040s.
Unions said the move would cause misery for UK workers.
“There has been no new evidence to show that people are living any longer since the last time the Chancellor increased the state pension age, yet today’s young workers are being told they must work until they drop,” TUC General Secretary Frances Grady said.
“Barely half of all men are able to work beyond the current state pension age. Raising it further will simply prolong an agonising limbo between their last job and their state pension.”