Rise in minimum pension contributions missed

Industry and employers need to encourage workers with ongoing support
Industry and employers need to encourage workers with ongoing support

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.

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.

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.”