6 March 2018
As you may already know, under the Government’s auto-enrolment scheme, designed to encourage us all to save for our retirement, it is compulsory for all employers to enrol any new employees into a workplace pension scheme and contribute to it. Since its introduction, contributions have been minimal. However, changes being introduced on the 6th April 2018 offer some good news for your retirement plans, as these minimum contributions will be increasing. Let us explain…
At present, you are automatically opted into a pension scheme if you meet the below criteria:
- You are at least 22 years old
- You are under State Pension age
- You earn more than the £10,000 per annum (equal to £768 per month or £192 per week)
- You usually work in the UK
Alongside a contribution of 1% from yourself on qualifying earnings, your company must also contribute 1%, creating a 2% total contribution. However, things are going to change…
From April 2018…
As of April this year, the minimum pension contribution will rise, which means more money from your company. As well as this, the amount you pay in will increase too, helping towards your future. In addition, you will also receive tax relief on your contributions from the Government. The legislation is due to change further in 2019 too. The below table helps to summarise this.
|Date effective||Employer minimum contribution||Employee contribution||Total minimum contribution|
|Up to 5 April 2018||1%||1%||2%|
|6 April 2018 – 5 April 2019||2%||3%||5%|
|6 April 2019 onward||3%||5%||8%|
The good news is this will happen automatically, and you do not need to do anything to get the ball rolling.
All auto-enrolment schemes must apply the increased rates in order to remain qualified.