More than six million workers will see their wage packets hit by a so-called stealth tax from next month.

A rise in national insurance contributions, announced in 2013 but coming into force from this April, could cost some workers several hundreds of pounds a year.

It is calculated someone earning £40,000 will lose £40 a month or nearly £500 a year because of the changes.

The extra money going to the Treasury is aimed at helping to cut the budget deficit by around £4 billion a year.

Three years ago, Chancellor George Osborne announced the abolition of the second state pension or Serps with the planned introduction of a single flat-rate state pension, which is meant to boost the pensions of millions of people.

In the old system, workers and employers could opt out of being entitled to a second state pension, enabling them to have lower rates of national insurance contributions. But with Serps being abolished, these people will from next month return to the higher rates of contribution.

Analysts have estimated the changes will affect 1.5m workers in the private sector and some five million in the public sector, who are paying into a final salary retirement scheme.

The Chancellor is likely to be keener to mention the introduction of the national living wage next month, which will raise the earnings of 2.7 million low earners. Workers over 25 will get a minimum of £7.20 an hour - the current minimum wage is £6.70 an hour.


Steve Webb, former Liberal Democrat pensions minister in the government and now director of policy at Royal London pensions company, said of the changes to national insurance contributions: “The Chancellor had hoped that no-one would notice this rather large tax increase smuggled out in advance as it was some years ago.”

Paul Johnson, of the Institute for Fiscal Studies think-tank, noted how workers in final salary pension schemes and their employers would now be paying the same national insurance contributions as most other people.

He added: “Since they will be building up just the same state pension rights, this can only be right.”

But Labour’s shadow work and pensions secretary Owen Smith said: "This is yet another example of the Tories failing to be straight with people about the impact of their pensions policy.

"They are always keen to trumpet any potential winners from pension reforms but the reality is that from next month millions of workers will get a nasty surprise when they open their payslips and see an unexpected drop in take-home pay.”

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