Insufficient pension concerns as auto-enrolment continues
13 Feb 2014
Employees are being urged to make greater contributions to their pension funds, as the Pensions Regulator reveals the latest auto-enrolment figures.
Larger businesses have been auto-enrolling staff since 2012. Based on their earnings, mandatory input from employees is 0.8%, with an equivalent of 1% paid in by the employer and 0.2% by the Government in the form of tax relief. This applies only to staff aged 22 or over, who earn at least £9,440 per year.
With 90% of both employers and employees making only the minimum payment, concerns have been raised about amounts actually being saved for the future.
With auto-enrolment happening in stages, the coming months will see medium sized businesses – employing 50-250 workers – needing to meet the legal requirement of providing a workplace pension.
Employers can check their staging date at www.thepensionregulator.gov.uk.
Experts and ministers recommend people start savings for a pension as soon as possible in their working lives, in order to top up the state pension when they come of age.