A LOT of people, especially public sector workers, will be in for a shock when they receive their first payslips of the new financial year, as the Chancellor takes another slice out of their wages to pay for his austerity cuts.

Changes to National Insurance, originally proposed by the Tory Chancellor in 2013, come into force this month.

Previously, employers who offered an occupational pension that replaced part, or all, of the additional state pension could “contract out” of their additional state pension.

This, in turn, meant a lower rate of National Insurance contributions was taken from both employers and employees.

However, as part of the Tory changes to pensions, the additional state pension has been abolished, and therefore, so has the rebate for those who contracted out of it, resulting in higher National Insurance contributions for both employees and employers.

Many public sector organisations offered their employees contracted out pension schemes and it will be those workers – and the organisations themselves – who will be hardest hit by this change.

Overall, more than six million employees across the UK will be affected by this change, about 1.5 million in the private sector and five million or so in the public sector. This increase in their National Insurance contributions could wipe out many of the pay deals that public sector workers have received in the past year or so.

And it’s not only the employees who will come under increasing financial strain. The employers – many of whom are public sector organisations like councils and the NHS – will see their National Insurance contributions rise as well under the new rules.

While employees will see a rise of 1.4 per cent in NI contributions, employers are facing a rise of 3.4 per cent. Unison Scotland estimate that this could deprive Scottish public services of about a quarter of a billion pounds in the coming year alone.

According to Unison Scotland’s research colleges, universities, the NHS and councils could be facing a budget gap of more than £238m from this Tory pension change. Police Scotland, which is already losing funding due to the Treasury refusing to refund its VAT bills, will see its pay bill increase by about £20m.

Local councils, which encouraged their employees to join the Local Government Pension Scheme to provide a decent retirement for staff, will also see their pay bills increase.

Although this will have a major impact on the budgets of public sector organisations as they get to grips with a Tory raid on their budgets these pension changes are expected to raise more than £5.5bn for the UK Treasury; boosting their coffers at the expense of many public sector workers and organisations.

This is all part of the Tory plan to introduce a simpler, flat-rate state pension. Yet many new pensioners who will be expecting this new pension will also be in for a shock as they realise that they won’t be getting the full pension rate that is being introduced.

A report by the Works and Pensions Committee, of which I am a member, highlighted a number of concerns over the introduction of the new state pension.

Although the idea of the new state pension may be a welcome simplification of an overcomplicated system, there will be problems in the transition to a new, single, flat-rate pension. About 55 per cent of claimants will receive less than the new weekly flat rate of £155.65.

Those with fewer than 10 years’ contributions, those deriving their pension rights from a spouse’s contributions, and those who may have built up guaranteed pensions between 1978 and 1988 may receive less than they would under current rules.

The transition to everyone receiving the full rate will take time. It won’t be until 2040 that as many as 80 per cent of pensioners start to receive the full rate.

The communication plan by the UK Government to promote the new pension has failed to realise the complications for each individual in the transition to the new pension scheme. No-one knows for certain if they will win or lose in the move.

The general awareness publicity campaigns simply don’t provide enough information for individuals trying to assess how the new pension scheme will impact on them.

Moving from a complex pension system to a simplified version means that each individual’s case is different and would require a personal evaluation of how the pension changes would affect them.

Without such information it makes it difficult for new pensioners, and those expecting to retire in a few years, to adapt their retirement plans.

The UK Government must provide accurate information to each individual as soon as possible.

If this all sounds familiar, then that’s because this is almost exactly what happened to women’s pensions, which has resulted in the WASPI (Women Against State Pension Inequality) campaign.

It seems like history is repeating itself, with the Tory government sleepwalking into another pension shambles.

The Tory pension changes will have an immediate impact on many employers as they see their National Insurance contributions rise, while new pensioners will be left in confusion as to how much they can expect from the new state pension.

All the while the Treasury will gain more than £5.5bn from these changes, money that should be spent on vital public services, rather than being clawed back by the Treasury to pay for tax cuts for the rich.