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WORKERS HAVE SIX MONTHS TO FIND AVERAGE OF £572

Monday, October 8, 2018

On 6 April 2019, the minimum contribution for workers in an auto enrolled pension jumps from 5% to 8%, with employers paying 3% (up from 2%) and workers paying 5% (up from 3%). That jump of 2% for workers equates to an extra £572[i] a year for anyone earning the UK’s average salary. 

While there is no legal requirement to inform employees about the rises in contribution levels, such an increase could still come as unwelcome surprise to some employees.

 A well-thought out communications strategy, however, can turn a nasty shock into a positive benefit.

 Bruce Kirton, chief executive of Welplan Pensions, says: “Auto enrolment is a resounding success but people do need to save a lot more in if they’re going to have a comfortable income in retirement. The government’s answer is to enforce higher payments – which come into force from 6 April 2019.

 “But there’s a carrot as well as a stick – and advisers and employers can help communicate the impact to employees, so they can start planning now. Otherwise many of the near-10 million[ii] auto-enrolled employees will be in for a nasty shock as their pay packets will suddenly be an average of £572 a year – or £48 a month – lighter.”

 Welplan’s approach to communications is to support employers and advisers with the tools and back office support they need – freeing them up to advise while taking all the hassle and administration off their hands.

 Bruce Kirton adds: “The increase to contribution levels is coming at a sensitive time, given the possibility a hard Brexit might adversely affect small businesses and given the rise in awareness of pensions scams.

 “We have been doing a lot of work with employers and their advisers on spotting and avoiding scams – and it’s something advisers and employers can discuss with members, as they talk through the implications and benefits of rising pension contributions.”

If you are an employer or adviser who would like help communicating the message about increased contributions, please get in touch with us today.

 

[i] The weekly average wage of £550 equates to £28,600 per annum – 2% of which is £572.00.  Source: Annual Survey of Hours and Earnings, 26 October 2017 

[ii] Source: TPR, August 2018 

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