With auto-enrolment pension contributions set to rise from April, millions of UK employees will experience a decrease in their take-home pay. 

The minimum contribution rates will rise from 5% to 8% of their salary on 6 April 2019, with the employee paying 5%. Auto-enrolment was introduced in 2012 and has now been fully rolled out across all sizes of companies. It has been hailed by the government as a major success with 10 million people being enrolled. Analysis carried out by Hargreaves Lansdown suggests that employees on £30,000 will take home £253 less and those on £15,000 will be about £49 worse off over the year. 

The government regards employee attitudes towards workplace pensions as positive, citing figures that reveal that in 2017-18, despite the total contribution rising from 2% to 5%, only 0.7% of contributors opted out of the scheme. Auto-enrolment currently still does not apply to those with low incomes; it only covers those who earn more than £10,000 a year who are over 22, meaning that many part-time workers who earn less than this and workers with more than one employer are left out of the auto-enrolment process. The threshold will be reviewed, however.

About the Author: Glen Callow

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