With the April 2019 auto-enrolment contributions increasing, statistics have shown that past increases have not materially affected membership as “opt out” rates have been maintained at around 8%. However, these rates of contributions are not going to be enough for many of those employees where their Workplace Pension is their only source of retirement income. Some experts are warning that some contributions need to be around 12-15%.
For those retiring today, they may be benefiting from several pensions including final salary pensions. Those employees joining the workforce today will not have the benefit of final salary pensions, where the employer was generously contributing to most of the pension costs of up to 25% of salary, as many of the private sector schemes are closed to new entrants. It is important that employees are encouraged to contribute more than the government minimums.