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Employees chatting over lunch

Employees contribute higher pension payments

On 6 April 2019, the minimum level of auto-enrolment contributions increased to 8% of earnings, made up of at least 3% from employers and the balance from employees. According to data from the Pensions Regulator, auto-enrolment has brought a total of 9,937,000 people into the scheme to date, and involved 1,400,918 employers.

By making workplace pension saving the default option, it's helped more employees save towards retirement where previously they might not have had access to a workplace scheme. Qualifying earnings include salary, wages, overtime, bonuses and commission, statutory sick pay, and any statutory pay received during paternity, maternity or any other kind of family leave.

Compound growth over the years

Employees aged 22 and over, who earn more than £10,000 a year and who were not already in a company pension scheme, have been automatically enrolled into saving for old age through the scheme, which began in 2012. More will be enrolled in the future as they start work or new jobs. This latest change marks the final increase in contribution rates designed under the scheme.

It can often seem daunting, and sometimes quite futile, to be putting away little bits of money each month that you can’t touch for decades – particularly if you’re just starting out in your career. The fact of the matter is that the earlier you start, the more you’ll have in retirement. Your pension pot is invested, so it benefits from compound growth over the years. This means that the more you have in the pot early on, the bigger it is likely to grow.

There are three key levels to be aware of:

  • Earnings Threshold - This is the trigger level of earnings which brings a ‘worker’ into auto-enrolment. It used to match the personal allowance, but since 2015/16 has been frozen at £10,000. That round number will stay in place during this current tax year.
  • Qualifying Earnings Lower Limit - This is the floor level of earnings above which contributions are payable, but only if the earnings threshold is triggered. It matches the lower earnings limit, which is a key level for social security benefit entitlement and is £6,136 (£118 a week) in 2019/20.
  • Qualifying Earnings Upper Limit - This is the upper level of earnings on which contributions are payable, currently £50,000. For Scottish taxpayers, the higher rate (41%, not 40%) threshold for earned income is set at £43,430 in 2019/20.

The future of your wealth

We'll help you understand the choices available to you, whether you are just setting out on your career path or approaching retirement.

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change. Workplace pension are regulated by the pensions regulator.

A pension is a long term investment. The value of investments and income from them may go down. You may not get back the original amount invested.

To discuss which options will work best for your retirement needs, please contact Amanda Heys on 07793621955 or email at

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