It’s never a bad time to save money into a retirement fund, however there are big changes coming to pensions in 2019, which you may want to read up on…
Workplace Contributions Will Rise
As of April, the amount of money workers pay into pensions is set to rise as part of automatic enrolment rules. Minimum contributions for employees will increase from 3% to 5%, with employer contributions rising from 2% to 3%. Auto-enrolment is not mandatory, however you do need to opt-out if you do not wish to contribute. There are concerns that raising the percentage too fast will put people off contributing - for many this increase will result in hundreds of pounds more per year - however it remains to be seen what effect this change will have.
Track Your Pensions Using Dashboards
We may finally see online pensions dashboards being launched, allowing workers to see information on their workplace pensions and state pensions in one place. Simplifying pensions is something that must be addressed, and making information and statements easier to access can only be a good thing for those who are paying into their retirement funds.
State Pension Increase
State pensions are set to increase from April this year. The full state pension will rise by £4.25 a week (or £220 per year), meaning it will now be worth £168.60 per week, or £8,767.20 a year.
Pensions Cold Calling Ban
With so many people being targeted by cold calling pension scams, the government have been planning to implement measures to help prevent them. This January, a ban on cold calls relating to pensions will come into effect.
Tax Relief Changes
Tax relief on pension savings has been an issue for the government for a number of years, and we could see a reduced level of tax relief brought in for high earners.
Nobody can predict with accuracy exactly how pensions will be affected by Brexit. Stock market turbulence is likely, which may not have too much of an impact on those a long way from retirement. It may be a good opportunity to pay more money into your pensions to take advantage of low buy in prices. Those closer to retirement or using drawdown for an income may have more to lose, as the chance for savings to recover is smaller.