Pension contribution hike to hit pay packets
Posted: February 17th, 2019, 5:37 am
Millions of workers could see their take-home pay fall in six weeks' time when the amount they have to pay into their pension pot increases.
Analysis for the BBC has examined how pay will be hit when higher contribution rates for those with auto-enrolment pensions kick in.
Since 2012, 10 million eligible workers have been automatically signed up to workplace pensions.
From April, their contribution will rise from 3% of their salary to 5%.
More on this story in this BBC article -
https://www.bbc.co.uk/news/business-47269042
It should be noted that the personal tax allowance will rise to £12,500 from April too, so that will limit the impact of the above pension-contribution hike -
"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."
The analysis carried out for the BBC by Hargreaves Lansdown suggests the annual 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.
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.
Cheers,
Itsallaguess
Analysis for the BBC has examined how pay will be hit when higher contribution rates for those with auto-enrolment pensions kick in.
Since 2012, 10 million eligible workers have been automatically signed up to workplace pensions.
From April, their contribution will rise from 3% of their salary to 5%.
More on this story in this BBC article -
https://www.bbc.co.uk/news/business-47269042
It should be noted that the personal tax allowance will rise to £12,500 from April too, so that will limit the impact of the above pension-contribution hike -
"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."
The analysis carried out for the BBC by Hargreaves Lansdown suggests the annual 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.
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.
Cheers,
Itsallaguess