Despite the fact millions of small businesses are still coming to terms with the burden and cost of implementing Automatic Enrolment, one influential body has called for contributions to be increased.
Currently the contributions, from both the employer and the employee, after being automatically enrolled into a workplace pension will rise over time, until they reach a maximum of 8% in 2018. By this date the employer will need to contribute a minimum of 3%, whilst the employee will pay 5% including tax-relief.
However, speaking at an event organised by the Tax Incentivised Savings Association members of its policy project suggested that a more sensible contribution target would be between 12 – 15% of earnings.
This echoes the view of many financial experts who believe the current target level of contributions is too low to fund a comfortable retirement and needs to be reviewed.
Automatic Enrolment criticism
The call for contributions to be increased will alarm some employers who have struggled to comply with the Automatic Enrolment rules.
However, Automatic Enrolment has also come in from criticism from some quarters for excluding millions of low paid workers who will not get the chance to join a workplace pension.
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If you are an employee worried about what Automatic Enrolment means for you we are here to help.
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