Auto Enrolment Changes

Since auto-enrolment pensions began in 2013, the average employee has only been paying in a few pounds every week. From 5 April 2018, contributions have risen.                     

Workers will need to decide whether to contribute extra into their pensions every year or leave the auto-enrolment scheme.

Here we explain what the changes will mean for the nine million workers in auto-enrolment.

How much extra will I have to pay?

Until now, employees have been paying 1% of their qualifying or basic wages into their pensions. This is made up of 0.8% from the worker, plus 0.2% in tax relief from the government.

For someone on an average £27,000 salary, this has meant annual contributions of about £169.

From April, this has risen to a minimum of 3%, or £517 on average.

In April next year (2019), the employee contribution rate will go up to 5%, or £876 a year.

What if I don’t want to pay the increased amount?

If you don't want to pay the increase, you can leave the scheme and stop making contributions. This would mean you would also lose the employer’s contribution.

How many will leave?

So far under auto-enrolment, about 7% of workers have opted out - far fewer than the government expected.

The industry expects that proportion to rise over the next two years.

Do I have to do anything?

Unless you tell your employer you wish to leave, your contributions will automatically increase.