Pension contributions are changing again
The Government increased the minimum pension contributions that must be paid into your workplace pension from April 2018, and will increase them again in April 2019.
HOW THIS AFFECTS YOU
Minimum contributions into workplace pensions will increase again in April 2019.
You, your employer and the taxman could be paying more towards your future.
It could make a big difference to your pension pot.
|Your employer pays||You pay||Total contribution|
|To 5th April 2019||2%||3%||5%|
|6th April 2019 onwards||3%||5%||8%|
These new minimum rates will apply to workplace pension schemes that receive contributions on ‘qualifying earnings’. In the 2018/2019 tax years these are earnings between £6,032 and £46,350. 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.
If you pay more than 20% tax on some of your income, you can claim additional tax relief either by contacting HMRC or via your self-assessment tax return. If you are a Scottish taxpayer the tax relief you will be entitled to will be at the Scottish Rate of income tax, which may be different from the rest of the UK.
Tax treatment depends on your individual circumstances. Your circumstances and tax rules may change in the future.
If you increased your contributions in April 2018 you, your employer and the taxman are already paying more towards your future, but you all could be paying even more when the contributions increase again in April 2019.
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.