If you are a member of your workplace pension scheme, the amount you pay in is set to go up this year from a minimum of 1% of salary to a minimum of 3%. This increase could test the household budgets of those who are unprepared for the changes, so don’t get caught out!

All employers, regardless of their size, must now automatically enrol their eligible staff into a workplace pension scheme and pay minimum contributions (subject to the individual also making contributions).

It is possible to opt-out of the auto-enrolment system but, most people don’t as this is effectively giving up “free money” from their employer in the shape of the employer pension contribution they would not otherwise get.

The Government has set minimum pension contribution rates for employers and employees and these are being gradually increased over time. Currently, the total minimum pension contribution is 2% – with 1% coming from the employer and 1% coming from the individual. This is set to change from 6 April 2018 when the minimum contribution will go up to 5% – with a minimum of 2% coming from the employer and 3% coming from the individual.

The final increase will occur from 6 April 2019 when the minimum contribution rates will go up to 8% – with 3% coming from the employer and 5% coming from the individual. Of course, these are only minimum requirements set down by law and some employers may be more generous!

Usually only basic salary is used to work out the contribution amount – with other benefits and bonus not being pensionable. However, this depends entirely on the rules of the particular pension scheme so do check what yours say!

If you have any concerns about your pension benefits and whether your employer is correctly complying with the auto-enrolment requirements, speak to one of our employment law experts today.



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