Workplace Pension Stalls-Your Money

The number of employees contributing to the workplace pension system has not changed in 2020, the first year since the introduction of the automatic enrollment system in 2012, when the increase in the number of pension savers has not progressed.

In April 2020, eight in ten employees (78%) had a workplace pension, according to new data from the National Bureau of Statistics. This represents a dramatic improvement from less than half of the workers who paid their workplace pensions nine years before auto-enrollment was introduced.

According to the data, the youngest employees between the ages of 16 and 21 were much less likely to receive a workplace pension, with a participation rate of only 20%. Participation in the next age group, 22-29, has increased dramatically, with a whopping 80% of workers being members of the scheme.

According to ONS, there is a big difference in the participation of employees in the public and private sectors. For example, about 93% of people working in full-time public sector roles who earn between £ 100 and £ 199 a week have a work pension, compared to 41% of people at the same wage level in the private sector. Has a workplace pension.

Who is eligible for the auto-registration scheme?

The auto-registration scheme was introduced as a way to encourage more people to set aside some money for retirement. It requires employees to open a pension on their behalf and then contribute to it.

However, there are rules that cover who qualifies for the scheme. Currently, employees with an annual income of over £ 10,000 are automatically enrolled in the pension, but they can opt out if they choose, but employees with an annual income of over £ 6,240 will also be enrolled in the workplace pension plan. You can choose and enjoy contributions from your pension. Employer.

Employees must donate at least 5% of their income. This adds 3% from the employer, plus a tax deduction from the government. Importantly, these are the bare minimum. Some employers offer a more generous system, but stopping individual employees from choosing to hide more money to increase their chances of a comfortable retirement you can not.

The scheme is successful, Concerns about the number of employees excluded from the workplace pensionAccording to a recent study, for example, during a pandemic, 100,000 single mothers were excluded from the plan.

Support required for self-employment

Quilter’s pension expert Ian Browne The fact that this year was the first year that participation was not improved may be attributed to those who feel they need more money in their pockets today, or without further government intervention. Suggested that it may represent an upper limit that does not pass.

Mr Brown also warned that it is important for authorities to consider how to boost pension savings among self-employed people who are outside the scope of the auto-enrollment system.

Previous research About 3.5 million self-employed people do not put money on private pensions, There are warnings, As a result of the pandemic, their contribution may have been reduced or suspended..

He continued. “Unfortunately, by the nature of last year, many self-employed people suffered a serious financial shock and are therefore unlikely to prioritize pension payments at this time. Their financial needs are that of other working populations. Unlike many, there is an urgent need to consider solutions to encourage workers in this group to save for retirement. “

Workplace Pension Stalls-Your Money

Source link Workplace Pension Stalls-Your Money

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