Employees have a significant deduction taken from their take home pay. The following table details examples of those deductions under qualifying earnings.
| If your annual pay is: | From April 2021 your personal gross salary deduction per month will be: | Tax saving included in contribution: | Employer contribution per month: | Your pension fund will receive: |
|---|---|---|---|---|
| £15,000 | £36.50 | £7.30 | £21.90 | £58.40 |
| £25,000 | £78.17 | £15.63 | £46.90 | £125.07 |
| £50,000 | £182.33 | £36.47 | £109.40 | £291.73 |
Although they are able to opt out, this would deprive them of the valuable employer pension contributions and in addition to this the tax relief they would receive on their own payments were they to be part of the scheme.
The Government is very keen to ensure that staff fully understand the long term consequences of not saving enough towards retirement. This is why they make opting out awkward, hence they introduced re-enrolment every three years, and are encouraging employers to provide their staff with additional education around financial planning.
We provide such education and guidance, paid for by the employer. This is an excellent opportunity for businesses to show their staff that they care about them, by making available the guidance and expertise required to turn an irritating deduction from salary into a valuable benefit to aid in ensuring future financial stability.