Automatic Enrolment Pension update

My wages are going DOWN, but my pension pot is going UP! How?

The question is, are you winning and is this helping you now? With pockets of uncertainty about what the next 6 months and beyond will hold for some people and naturally raising questions about whether or not people can afford this, the search for answers will be under the microscope on how best to tackle it.

Under workplace pension rules that came into effect in 2012, depending on your age and salary, your employer must automatically contribute a percentage of your earning into your pension every payday. Your employer is required make a minimum contribution and you must make up the difference; therefore, you and your employer must pay a percentage of your earnings into your workplace pension scheme.

How much you pay and what counts as earnings depend on the pension scheme your employer has chosen. Ask your employer about your pension scheme rules.

In most automatic enrolment schemes, you’ll make contributions based on your total earnings between £5,876 and £45,000 a year before tax. Your total earnings include:

• salary or wages
• bonuses and commission
• overtime
• statutory sick pay
• statutory maternity, paternity or adoption pay

Workplace pension contributions

From 6th April 2019, the minimum amount your employer is required to save into your pension pot will increase. If you and your employer currently contribute a minimum of 3% and 2% of your qualifying earnings respectively, then this will affect you.

Your contribution rate is rising from 3% to 5% and from 2% to 3% for your employer. This means each month you will get a total of 8% of your qualifying earnings paid into your pension savings pot. The increase is great news as it will help give you a more comfortable life in retirement.

If this development is going to trigger off your job search, please feel free to contact us at [email protected] . We are looking forward to speaking to you.