Pensions Automatic Enrolment
Auto enrolment pensions place new duties on employers to automatically enrol all eligible employees into a work based pension scheme and pay pension contribution on their behalf. Where the employer does not make the total minimum contribution the employee is obliged to pay the balance.
Contributions have been phased in:
|Employer’s Staging Date||Minimum Contributions|
|To 5th April 2018||1%||2%|
|6th April 2018 to 5th April 2019||2%||5%|
|6th April 2019 onwards||3%||8%|
|Automatic enrolement earnings threshold||£10,000||£10,000|
|Qualifying earnings band – lower limit||£6,032||£5,876|
|Qualifying earnings band – upper limit||£46,350||£45,000|
Tax Relief on Pension Contributions
Tax relief is available on private pension contributions worth up to 100% of the annual earnings.
Tax relief is provided automatically if your :
- employer takes workplace pensions contributions out of your pay before deducting Income Tax
- rate of Income Tax is 20% – your pension provide will claim it as tax relief and add it to your pension pot
Most stakeholder and personal pensions and some workplace pensions provide tax relief at source, if yours scheme is not setup for automatic relief you can claim it in your Self Assessment tax return.
The basic state pension is a regular payment from the government that an individual may be entitled to when they reach the State Pension Age. The basic State Pension depends on the number of years an individual has paid National Insurance or received National Insurance credits for example while unemployed or claiming certain benefits.
To benefit from the full pension an individual will need to have paid 35 years of National Insurance contributions, with pro-rating where 35 years is not achieved.
|Weekly Basic State Pension||2018/19||2017/18|
|New State Pension||£164.35||£159.55|