Head of savings and retirement at Aviva Alistair McQueen asks are you ready for workplace pension increases?
On April 6 2019, minimum contribution increases to auto-enrolment pensions (AE) will rise to 8% of earnings.
This will typically be 5% from the employee (including tax relief) and 3% from the employer.
AE started in 2012 with minimums set at 2% of earnings. In April 2018, they were increased for the first time to 5%.
Auto-enrolment has been incredibly successful at introducing people to pension saving.
Almost 10million more people are now saving into a workplace pension because of it – the equivalent of an extra 4,500 new savers every day since October 2012.
However, for many, the amount being saved is too low, with millions of people sleepwalking towards less than minimum wage at retirement.
This is why AE minimums must increase.
It’s vital this message gets out there to employers and employees.
It will give people time to understand what is happening, why it is happening and hopefully to understand the benefits of saving more into a workplace pension.
The type of retirement we can achieve is very much in our own hands.
The money saved into a workplace pension belongs to the individual and, when they reach 55 it is theirs to access in a way that suits them best.
Planning for retirement now and saving a bit more each month could make a huge difference to the future.
According to kbb industry leaders, consumers able to access pension funds at 55 benefits sales.