£17 billion extra a year will be saved into workplace pensions as a result of auto-enrolment by 2019/20, according to the Department for Work and Pensions.

Estimates show that this figure will be made up of around:

• £8 billion in employee contributions
• £6 billion in employer contributions
• £2 billion of tax relief on employee contributions.

Further findings:

• 11 million workers are estimated to be eligible for auto-enrolment
• 10 million workers are estimated to be saving more as a result of auto-enrolment by 2018
• three quarters of all workers are estimated to be eligible for auto-enrolment.

Richard Harrington, Minister for Pensions, said:

“For some people, this may be the first time they have saved in this way and we must help them build a big enough savings pot so they can enjoy a comfortable retirement.”

Minimum contributions

The employer and employee are required to pay a minimum percentage of qualifying earnings.

For 2016/17 qualifying earnings are between £5,824 and £43,000 a year (rising to £45,000 for the 2017/18 tax year). The first £5,824 is not included in the calculation of an employee’s contribution, setting an upper limit of qualifying earnings of £37,176.

Salary, overtime, bonuses, commission and statutory pay are all included when calculating qualifying earnings.

Get in touch

Our team can advise you on auto-enrolment and other workplace benefits. Give us a call on 01483 205890.