Auto-Enrolment Encourages Saving Surge
14th December 2017.
The number of people putting money away for retirement under employee pension plans has surpassed nine million for the first time.
According to a new analysis from consultancy Willis Towers Watson, changes to ‘auto-enrolment’ has led to a surge in long-term savings via company schemes.
At the moment employers must pay 1 percent of an employee’s salary into a pension, with the worker adding another 1 percent. From April 2018, this will rise to 2 percent and 3 percent respectively, which Willis Towers Watson estimates will lead to a £520 a year drop in income for someone earning £45,000 a year.
This will result in an extra £1,165 going into a pension each year.Staff aged 22 and over and who earn £10,000 a year or more must be added to schemes by employers. Other employees will have to make a request to be enrolled.
A Government review of auto-enrolment is due to be published before Christmas. This is expected to recommend raising rates even further and expand the scope of the programme to younger workers and the self-employed.
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