The minimum workplace pension contributions are set to rise to 5%. Most employers will experience a rise in contributions this year, increasing from 3%. It will impact all employees between 22 and state pension age who earn more than £10000 a year. These employees must be automatically enrolled in a workplace pension scheme.
The result of the automatic enrolment scheme has been significant. In February 2019, the number of employees in a pension exceeded 10 million for the first time. The incremental rise of those in a scheme is a direct result of the staged implementation of the scheme, starting in 2012.
Previously, employers were only expected to match the employee’s minimum contribution of 1%. However, minimum rates increased to 3% in 2018 and now to 5% in April this year. This is expected to be the last stage of the implementation period.
There is some concern that the rise in contributions will lead to some employees opting out. However, research by the Association of Consulting Actuaries suggested that most wanted to remain in the scheme, with 75% of those employers polled expected no increase in opt-outs from April this year.
The content in this article was correct on 9th March 2019. You should not rely on this article to make important financial decisions. Teachers Financial Planning offers advice on pensions for those not in teaching, as well as those in the teaching profession. Please use the contact form below to arrange an informal chat with an advisor and see how we can help you.