Workers’ pension contributions are set to increase in the very near future.
As of April this year, annual salary contributions towards workplace pensions will increase from 3% to 5%. This will mean that millions of workers will see a slight decrease in their take home pay, as their contributions to pension pots increase.
Over 10 million people have been automatically enrolled into workplace pensions since 2012, with many potentially unaware of the changes to their income on the horizon. According to Hargreaves Lansdown, a person earning £30,000 will take home £253 less in the next financial year due to the contribution increase. This amount could have been larger, were it not for the increase to personal tax allowance, also set to be introduced in April.
Deterrent or Incentive?
There is a worry that this increase to pension contributions may put people off of paying in to one, however the contribution increase last year did not result in a large drop off of contributor numbers. BBC News has more on the rise in pension contributions. We have more on what you can expect from pensions in 2019 here. If you would like help or advice on planning for your retirement and choosing the right pension for you, please get in touch. Our experienced advisers would be pleased to talk through your requirements.