Rise in minimum pension contributions missed

More than two-thirds of employees do not realise that the minimum amounts they need to save into their workplace pension are set to increase, a survey has found.
By The Newsroom
Published 19th Oct 2016, 06:00 BST
Updated 25th Oct 2016, 18:52 BST
Industry and employers need to encourage workers with ongoing supportIndustry and employers need to encourage workers with ongoing support
Industry and employers need to encourage workers with ongoing support

Scottish Widows found 68% of people are unaware that the minimum contributions under automatic enrolment will increase over the coming years.

Under the auto-enrolment scheme, employees contribute a portion of their wages into their pension, with contributions also coming from employers as well as tax relief.

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Minimum contributions are being gradually phased upwards, so that from April 6 2019 they will increase to 8% of qualifying earnings, of which a minimum of 3% must come from the employer. Currently, the minimum contribution rate is 2%, with at least 1% coming from the employer.

Scottish Widows’ Workplace Pensions report said that despite this lack of awareness, only 3% of people said they would opt out when their contributions increased.

More than a quarter (27%) of people said they cannot save any more into their workplace pension due to financial pressures.

David Holton, director of pension propositions at Scottish Widows, said: “The industry and employers alike need to continue encouraging all workers by providing them with ongoing support on the benefits of being more engaged with longer term savings.”