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Levi Winchester & Aaron Morris

Martin Lewis reveals how you can get a 'hidden pay rise' from your employer

Martin Lewis has pleaded the importance of workplace pension auto-enrolment, so workers can receive a 'hidden pay rise' from their employers.

In the UK, anyone who earns more that £10,000 a year, who are aged between 22 and state pension age are automatically enrolled into a workplace pension scheme.

And when you make contributions into your pension pot, your employer must also put additional funds in for you.

Read more: Here's why your bills are going up even though energy prices are staying the same

The Mirror reports that in turn, this means that you’re getting extra money that you else would have missed - even if you can’t access it until you retire. The minimum total auto-enrolment contribution is eight per cent in total, with employees donating five per cent and employers making up the rest.

While this means you're sacrificing a part of your take-home pay from your salary, your contributions come pre-tax - so you're actually spending less than you may think. Contributing to your private or workplace pension - not state - attracts tax relief at your highest marginal rate.

For basic rate taxpayer, this is 20%- while higher rate taxpayers can claim 40%. Addition rate tax payers meanwhile, get 45%. Basic rate taxpayers putting £100 per month away only actually reduce their take-home pay by £80.

And if your employer then puts three per cent in on top - for every £100 per month saved by you, the employer would pay £60. That means for monthly savings of £160, you've only sacrificed £80 in total.

For higher rate taxpayers, the cost is smaller at every £60 per £100 invested. Money saving guru Martin Lewis issued a reminder for auto-enrolment in his latest MoneySavingExpert email.

He said: “Are you an employee? Don't throw away a hidden pay rise. This is about auto-enrolment pensions - almost everyone should try to avoid opting out - or you're throwing away free cash from your employer.”

New DWP-backed proposals want to see the auto-enrolment age reduced from 22 to just 18. The lower earnings limit - which is the point your earnings are used to calculate your pension contributions - currently sits at £6,240. This will also be abolished via the proposals.

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