£17 billion extra a year will be saved into workplace pensions as a result of auto-enrolment by 2019/20, according to the Department for Work and Pensions.
Estimates show that this figure will be made up of around:
- £8 billion in employee contributions
- £6 billion in employer contributions
- £2 billion of tax relief on employee contributions.
- 11 million workers are estimated to be eligible for auto-enrolment
- 10 million workers are estimated to be saving more as a result of auto-enrolment by 2018
- three quarters of all workers are estimated to be eligible for auto-enrolment.
Richard Harrington, minister for pensions, said:
“For some people, this may be the first time they have saved in this way and we must help them build a big enough savings pot so they can enjoy a comfortable retirement.”
The employer and employee are required to pay a minimum percentage of qualifying earnings.
For 2016/17 qualifying earnings are between £5,824 and £43,000 a year. The first £5,824 is not included in the calculation of an employee’s contribution, setting an upper limit of qualifying earnings of £37,176.
Salary, overtime, bonuses, commission and statutory pay are all included when calculating qualifying earnings.
The minimum contribution levels are:
|Until April 2018||2018/19||From 6 April 2019|
|Government tax relief||0.2%||0.6%||1%|
Our team can advise you on auto-enrolment. Contact Vicki Harper for more information.