£17 billion in workplace pensions by 2020

£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.

Further findings:

  • 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.”

Minimum contributions

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 20182018/19From 6 April 2019
Employer1%2%3%
Employee0.8%2.4%4%
Government tax relief0.2%0.6%1%

 

Our team can advise you on auto-enrolment.

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