The minimum contribution you and your staff must pay into your automatic enrolment workplace pension scheme has increased.
As of 06 April 2019, the Government has phased in the new rates which employees and employers must pay into pension schemes each month.
The minimum employer contribution has risen from two to three per cent, while the minimum staff contribution has increased from three to five per cent. This means an employee will be saving eight per cent of their annual salary into their pension pot each year.
The move is expected to affect around 10 million workers, who will now be paying out a bigger chunk of their pay packet into their pensions each month.
For someone earning £30,000 a year, this means putting an extra £32 into their pot each month.
The latest figures indicate that the workplace pension scheme has brought almost half of the country’s small business workforce into workplace pensions, increasing participation rates by some 44 per cent.
It means that seven in 10 workers are now saving for retirement, compared to one in six before the scheme was launched.
Commenting on the figures, Minister for Pensions and Financial Inclusion Guy Opperman said: “Automatic enrolment has been an extraordinary success, transforming pension saving and improving the retirement prospects of more than 10 million workers already.”
He added: “As this report shows, small business owners all over the UK have made this possible, with participation rates estimated to have been increased from 26% to 70% due to automatic enrolment. This radical reform is creating a new relationship between the employee and their employer.”
Anyone between the age of 22 and the state pension age earning more than £10,000 a year must be enrolled into an automatic enrolment pension scheme by law.
While employees can choose to opt out of the scheme, they must be automatically enrolled again once every three years.
For help and advice, please get in touch with our expert financial planning advisory team.