Budget rules reshape confidence 

Britons reacted to the 2025 Autumn Budget with a pronounced generational split, according to immediate post-Budget research by Standard Life, which found a 74 percentage point gulf in confidence between younger and older adults and rising anxiety over planned pension and tax changes. Overall approval for the Budget stood at net –8%, but attitudes diverged sharply: those aged 18–34 recorded net positive sentiment, while households aged 55 and over registered a deep net negative response.

Standard Life’s polling showed younger adults welcomed measures such as the rise in the national living wage and the removal of the child benefit cap, with net support of +58% and +33% respectively, a contrast with the over‑55s, whose approval fell to net –37% amid dissatisfaction with perceived tax rises and adjustments to ISAs and pensions. The firm says confidence that pensions will meet retirement income needs has dropped by 10 percentage points year‑on‑year.

A major source of the unease is the Government’s announced overhaul of salary sacrifice for pension contributions, including a £2,000 annual cap on such arrangements due to take effect from April 2029. Standard Life’s research finds almost one in five consumers are "very concerned" about the changes, rising to a third among those on higher pay, and many fear a reduction in the incentives to save via employer schemes. Industry commentary has flagged similar concerns about the cap’s impact on the efficiency of workplace pensions.

Beyond salary sacrifice, the Budget confirmed an extension of the freeze on income tax and National Insurance thresholds until April 2031. Standard Life’s analysis quantifies the long‑term cost: by 2031, an earner on £30,000 would pay around £1,476 more in income tax and NI than if thresholds had tracked inflation since 2021, while someone on £80,000 could face an extra c.£4,420. That “stealth tax” effect helps explain why support for the freeze is positive among younger cohorts (+36%) but negative among those aged over 55 (‑29%).

Standard Life also highlighted other Budget adjustments that intersect with household planning: the reduction of the Cash ISA deposit limit to £12,000 from April 2027, increases in dividend tax rates, and a 4.8% rise in the State Pension from April 2026. Advisers and wealth managers have set out similar summaries of these measures, stressing their importance for long‑term financial planning.

The polling further suggests behavioural consequences: almost one in five respondents overall , and 41% of those earning £70,000+ , said the new salary sacrifice rules may influence whether people accept promotions or higher‑paid roles, with high earners particularly worried about impacts on future pay progression and incentives to save. Standard Life warns such distortions risk undermining workplace saving and eroding trust in pensions at a time when many are already under‑saving.

Mike Ambery, Retirement Savings Director at Standard Life, part of Phoenix Group, said: “The Budget has landed very differently depending on where people are in life. Younger adults see room for optimism – many support steps like the rise in the national living wage, which perhaps gives them a sense that the system is beginning to move in their favour. However, it seems older generations feel as though the rug is being pulled under them at the worst possible moment. Even measures designed to shield retired households haven’t shifted that sentiment. This may reflect a more forward‑looking concern – a sense that the system could become harder to navigate, and that future generations could face an even tougher environment.

Salary sacrifice has been one of the most reliable tools for helping people make every pound of their savings go further. Changing it now risks making saving feel harder at a time when most people are already under‑saving for retirement. Combine that with frozen tax bands quietly pushing more people into higher rates of tax, and the sense of financial pressure only grows. If the system becomes more complicated and less rewarding, people may lose trust in pensions, which is a risk none of us can afford.

This is a moment for clarity and stability. Pensions are for the long‑term, and any future reform should give people more certainty about their future, not less.” 

The research and market commentary together underline a policy dilemma: measures that deliver immediate support for younger workers can nevertheless leave older households and medium‑term savers feeling exposed, while structural changes such as caps on salary sacrifice and prolonged threshold freezes have distributional and behavioural effects that advisers say require clear, sustained policy signals to avoid undermining retirement saving. Financial planners and employer sponsors will need to reassess advice and workplace arrangements in light of the published Budget rules. 

Source: Noah Wire Services

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