What Are Auto Enrolment Rates?
Please note this blog post was published over 12 months ago and so may not include the most up-to-date information, for example where regulation around investing has changed.
Put simply, your Auto Enrolment Pension takes a small percentage of your monthly earnings along with contributions from your employer and the government, to help you build a pot of money that you can live off in retirement.
To ensure you don’t miss out on the benefits of a Workplace Pension, your employer will automatically enrol you if:
- you’re employed within the UK,
- you earn over £10,000 per year, £833 per month, £192 per week; and
- you’re aged between 22 and State Pension age.
If you’re don’t fit these criteria, you may still be able to join the Pension scheme by opting in through your employer.
What are Auto Enrolment rates?
Auto Enrolment rates are the percentage of your pay which you, your employer and the government pay into your Pension.
These rates have not changed since the 6th April 2018, however, new rates are set to be introduced from the 6th April 2019 onwards. These new Auto Enrolment rates will see you, your employer and the government increase their minimum contributions a final time.
The current earnings threshold for payment begins at £6,032 and ends at £46,350, meaning, 2.4% of whatever you earn in between those two points is automatically added to your pension fund, helping you secure your finances for the future. From the 6th April 2019, the threshold will change to £6136 and £50,000, meaning, 4% of whatever you earn will be automatically added to your pension fund.
Why do Auto Enrolment rates matter to you?
With Auto Enrolment rates set to increase from the 6th April 2019, you’ll not only be putting more aside for later to build a better fund for your retirement, but also be getting more from your employer and the government.
These rates are the minimum you have to pay, if you want to secure your financial future sooner you can choose to add more money to your fund.
Our most recent ‘Tackling The Savings Gap’ report delivered a startling insight into attitudes towards saving for retirement. Our research shows that most Britons think they’ll need £23,000 a year in retirement to live comfortably, however, based on actual savings behaviour, people in the UK are on course to receive an income of just £6,000 per year from their retirement fund.
Your Auto Enrolment Pension and the increased rates from you, your employer and the government offer a powerful tool to help you reach your savings goals for retirement as quickly as possible.
Putting away a small percentage of your earnings each month, could help you secure a comfortable retirement.