Automatic Enrolment Contributions Rates: Boosting Your Pension
From April 6th 2018 anyone who has been automatically enrolled into a workplace pension will be benefiting from a doubling of contributions. The minimum employers are required to pay into workplace schemes has now increased, along with the increase in the employee contributions; which (for most people) get tax relief. This all adds up to make a very efficient way to save for the longest holiday of your life, retirement!
Along with increased pension contributions, the new tax year has also seen an increase in the personal tax allowance, the point at which people start paying tax, as well as the lower earnings limit, the point at which employees start paying National Insurance. There has also been an increase of the national minimum wage to £7.83. All of these factors help make the increase in contributions to pensions more affordable.
Michelle Cracknell, Chief Executive of The Pension Advisory Service commented:
“The increase in pension contributions is a positive step towards ensuring we all have enough income in retirement. Workplace pensions are a great way to save for later life and come with several benefits. By staying part of your workplace pension, you benefit from tax relief on contributions making it a smaller dent in your take home pay.
If you’re not eligible to join your workplace scheme (not between the age of 22 and state pension age or earn less than £10,000), you may still be able to opt in to a workplace pension. Talk to your employer who may allow you to join and could even be prepared to make a contribution.