Pension contributions are Changing
The Government is increasing the minimum pension contributions that must be paid into your workplace pension from April 2018, and then again from April 2019.
HOW THIS AFFECTS YOU
Minimum contributions into workplace pensions will go up in April 2018.
You, your employer and the government could be paying more towards your future.
It could make a big difference to your pension pot.
Minimum pension contributions - Explained
What difference will the increase to minimum pension contributions make? This video sums up the changes.
|Your employer pays||You pay||Total contribution|
|Currently until 5 April 2018||1%||1%||2%|
|6 April 2018 to 5 April 2019||2%||3%||5%|
|6 April 2019 onwards||3%||5%||8%|
These new minimum rates will apply to workplace pension schemes that receive contributions on ‘qualifying earnings’. In the 2017/2018 tax year, these are earnings between £5,876 and £45,000. Please ask your employer for the rates that will apply to you.
The Taxman will normally top up your contribution with basic rate tax relief (currently 20%). So, if you pay £80, the Taxman can add £20, giving a total contribution to your pension of £100. Higher and additional rate taxpayers can claim further tax-relief via their self-assessment tax returns.
From April 2018, you, your employer and the Taxman could be paying more towards your future.
Tax treatment depends on your individual circumstances. Your circumstances and tax rules may change in the future.
Although you could be paying a bit more, it could make a big difference to your pension pot. Pensions are a long-term investment. The retirement benefits you receive from your pension plan will depend on a number of factors including the value of your plan when you decide to take your benefits which isn't guaranteed, and can go down as well as up. The value of your plan could fall below the amount(s) paid in.