Your UK Pension Contributions Are Increasing But That's A Good Thing

If you're reading this, it's likely that you're not a pensioner. Now, don't go writing in saying your Nan loves LADbible. We know this. She sent us cake at Christmas and a hilariously rude card with a witty limerick.

But in general, you lot are young go-getters with nothing on your mind but spending money, having a good time and probably splurging on cake. Nonetheless, a pension is a good idea, because as you get older, one of these days you'll need pot to dip into so as to be able to look after yourself.

Some of you might be aware that from 6 April 2018, the amount of money you need to contribute to your pension (if you're automatically enrolled on one) is set to go up. As annoying as that sounds, it's worth a hell of a lot of money over time, not least because (and here's the fun part) it means your boss/company also has to pay more into your pension.

via GIPHY

From 6 April, contributions will rise from two per cent to five percent, reaching a total minimum of eight percent by the same date in 2019.

Employers and staff members can choose to pay more than the minimum if they want, and staff members (you) will have to make up any shortfalls that remain in the new total minimum contribution, if there are any.

There are a number of different criteria to qualify for the automatic enrollment pension scheme, which you can find in more detail here.

Credit: Pictures of Money (Creative Commons)
Credit: Pictures of Money (Creative Commons)

For the average earner, the changes will see an extra £540 coming out of your pay packet.

For those who can afford to stomach the near five-tonne-plus hit, it'll be worth it in the long run. Staying in such a scheme could be worth almost half a million quid throughout your working lifetime, which is a hefty wad of cash/pension.

It is possible to opt out of the above schemes by contacting your pension provider and notifying your boss - but with companies now expected to pay more into pension schemes to reward you for your hard work, it would seem unwise to do so unless you are really struggling for cash.

Either way, it's a smart idea for you to budget for the changes, calculating how much you will have coming in/out come 6 April, while also assessing the value of an auto-enrollment pension scheme for you as an individual.

Featured Image Credit: Pictures of Money (Creative Commons)

Ronan O'Shea

Ronan J O'Shea is a freelance journalist from London who has written for titles including LADbible, Headspace, The Independent, National Geographic Traveller and New York Post. Contact him at [email protected]

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