The new financial year, which started on 6 April, saw an increase to contributions into auto-enrolment pension schemes. For those signed up to an auto-enrolment pension scheme, workers and employers will both be required to put away more into a pension pot. The minimum contributions have risen to 8 percent, with employees now paying in 5 percent and employers contributing 3 percent. This is up from the 5 percent of contributions workers and companies were required to pay in last year, where employees contributed 3 percent and employers 2 percent.
But despite the changes already being put into place, a staggering 35 percent of workers are unaware of how much they are paying into their pension each month, according to pensions advice specialist Portafina.
Auto-enrolment pension contributions are taken directly from pay packets, meaning this amount is found on an employee payslip.
In addition to this, 47 percent of working Brits said they do not understand how auto-enrolment works, with 14 percent admitting they do not what auto-enrolment means.
Only 33 percent believe their pension pot, including the State Pension, is on track to maintain the living wage from the age of 65, despite the increase in auto-enrolment contributes.
Jamie Smith-Thompson, managing director at Portafina, said: “Those that qualify for a workplace pension will notice more coming out of their pay packet from 6 April.
“This is because employee’s contributions into a workplace pension scheme via auto-enrolment have risen to 5 percent, including tax relief.
“Coupled with increased employer contributions, this could have a massive positive impact on the standard of living Brits can look forward to in retirement.
“Auto-enrolment is currently available to everyone over the age of 22.
“This means those fresh out of higher education could have the opportunity to start saving for their future immediately, providing they earn over £10,000 a year and usually work in the UK.
“However, over half (54 percent) of 18-24-year olds felt that a lack of education at school has stopped them from taking their pension seriously.
“It’s also shocking to see that they were the most likely age group to wrongly think that they couldn’t access their pension until they were 65.”
The Pensions Advisory Service can offer guidance and cover the pension basics.
Or to talk about how your money is invested, speak with an independent financial adviser who is regulated by the Financial Conduct Authority.