More than one in four workers have no idea that their automatic work pension contributions were increased as of 06 April.
A survey for insurance firm Aviva found that 27% knew nothing of the change that has increased contributions from the auto-enrolled from 5% to 8% of pensionable salary. Another 29% said they had heard a change was imminent but did not know the details and only 44% claimed to be up to speed on the planned increase.
From April 6, employees will contribute a minimum of 4%, with employers matching a minimum of 3% and a supplementary 1% of tax relief added.
The research also found 9% said they would opt out of their workplace pension scheme when the new contributions come into effect.
For an employee on the average salary of £27,500 an extra £50 will go into their pension pot each month.
Source: UK Pensions Regulator.
Alistair McQueen, head of savings and retirement at Aviva, said:
“So far, employers and employees have taken auto-enrolment in their stride, but contributions have to rise to give more savers a chance of a decent retirement.
"Contributions started at 2% of earnings which eased people into the idea of retirement saving, but that was never going to be enough to provide most people with a comfortable retirement.”
Kenneth Gibson MSP commented:
“While I am sure this increase will eventually benefit those who pay more into it, I do believe it is important for people to know that they will have to contribute more every month so they can budget for it. By the sound of it the UK Government has not publicised this change widely enough, while it impacts on the household budgets of many across Scotland and the UK.
“I urge employers, if they have not done so, to circulate this information to their employees.”
A guide published by the Pensions Regulator can be found here.
ENDS
