The government’s pension auto-enrolment scheme was introduced from 2012 and applies to all employers. With our help, businesses of all sizes in Stafford and its surrounds have introduced auto-enrolment successfully to their eligible employees. The good news is, it seems to be working.
Increases in people saving
According to the Department of Work and Pensions (DWP), the number of private sector workers saving into a pension has almost doubled in five years. At the end of 2018, nearly nine in 10 eligible workers were saving into a workplace pension.
In April this year contributions increased, bringing the total for all participating employees to 8% of salary, with the employer being responsible for 3% of that total.
More being saved
This has led to an increase in the amount saved, which grew by 8% to a total of £90.4bn. This includes a huge £8.9bn from tax relief – as employee pension contributions are tax deductible.
Whilst these figures are encouraging and seem to be convincing Britons of the merits of planning for their retirement, there is a different story for those who work for themselves. The self-employed account for nearly 15% of the UK population and are currently excluded from auto-enrolment.
Warning for the self-employed
Their numbers have risen dramatically, by 45% since 2001, from 3.3 million to 4.8 million in 2017 (ONS stats). Meanwhile, the number saving into a pension of their own accord has fallen from 30% in 2007 to just 14% in 2017.
Even in the absence of an employer contribution, there are other factors that make pensions an extremely attractive option for the self-employed. This includes the combination of tax relief, the power of tax-free compound income growth and the flexibility from age 55 to cash in your contributions, with the first 25% being tax-free, too.
For advice on pensions and auto-enrolment, talk to our specialist advisers.