Workplace pensions explained – Rest Less

The government’s auto-enrolment rules apply to this type of pension. These mean that if you’re an employee aged 22 or over and earn at least £10,000, you’ll be automatically enrolled into a workplace pension scheme into which both you and your employer must contribute. It’s possible to opt out if you wish, but doing so isn’t generally considered sensible, as you’ll miss out on employer contributions.

If you earn less than £10,000, you can still choose to join your employer’s pension scheme to benefit from their contributions. You may work for a few employers earning less than the auto-enrolment threshold for each job. Read more about joining your company pension scheme if you’re on a low salary in our article Can I join my workplace pension scheme if I’m on a low salary?

Under current rules, you’ll pay 5% of your salary before tax into your employer’s workplace pension scheme, and this includes 1% tax relief. Meanwhile, your employer will contribute 3%, increasing the total contributions to 8% of salary.

However, some employers pay in more than the minimum, and if you wish, you may also be able to contribute extra. Some employers will offer to match your contributions up to, for example, 10% of salary, and these additional employer contributions can effectively be considered a pay rise that you’ll ultimately receive in retirement. .

You’ll find the amount of pension contributions that are being deducted from your salary before tax on your payslip, but if you want clarity on this and whether you’ve been auto-enrolled, you can always check with your employer.

Pension contributions under auto-enrolment only have to be paid on so-called ‘qualifying earnings’ of between £6,240 and £50,270 in the 2022/23 tax year. Therefore, if you earn a low or particularly high salary, the amount you receive as a proportion of salary into your pension may differ from the standard percentage under auto-enrolment rules. If you’re unsure exactly how much is being paid into your pension, you may want to check with your employer.

Author: wpadmin

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