Aon welcomes auto-enrolment increases

Aon welcomes auto-enrolment increases

Aon has noted and welcomed the increases to the legal minimum workplace pension contribution rates that took effect in the UK from 6 April.

Minimum pension contributions increased to 5% of qualifying earnings from the employee and 3% from their employer for eligible UK workers.

According to Aon, after the increase to company contributions and taking into account tax relief, the change will mean an extra £58 per month is paid into an employee’s pension pots. This could result in around an extra £55,000 in today’s money in an individual’s pension pot at retirement.

Sophia Singleton, partner and head of defined contribution consulting at Aon, said: “Modern-day company pensions remain one of the best ways to save for later life—even if they no longer come with the guarantees of previous generations. The value of company contributions and tax relief added to individual savings—plus the potential returns and the cap on investment costs—mean that for most people workplace pensions are the best long-term savings option available.”

“Auto-enrolment into workplace DC schemes has been with us now for seven years and while its roll-out has to be regarded as a success, there have always been reservations about the level of saving it involves and the level really needed for a comfortable retirement. These latest changes are an encouraging and necessary step in making certain that saving rates move up to a suitable level.”

Categories: News, UK Pensions

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