Hike in automated pension contributions set to hit pay

The Pensions Regulator (TPR) has reminded employers that from 6 April 2019 the amount that will need to be paid into a workplace pension will increase to an overall minimum of 8 per cent, with employers contributing at least 3 per cent of this total amount.

Hike in automated pension contributions set to hit pay

TPR is now starting to write to all employers to remind them of their duties and is advising that they should also check with their payroll software provider and pension provider to ensure plans are in place ahead of 6 April 2019.

Since 2012, 10 million eligible workers have been automatically signed up to workplace pensions.



Under the new parameters, take-home pay of someone earning £15,000 will typically be £49 lower, if they pay contributions on their entire salary.

Someone on £30,000 will take home £253 less, according to the calculations made by the investment company Hargreaves Lansdown.

The hit to net pay could have been bigger, but a tax cut for most earners will soften the blow of higher auto-enrolment contributions.

The personal allowance is due to increase to £12,500 from April.

Tom McPhail, head of policy at Hargreaves Lansdown, said: “This is quite a significant increase relative to what they’ve been paying to date.

“This is going to affect up to 10 million people who’ve been auto-enrolled in the past few years, so the potential impact of this change is quite substantial.”

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