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.
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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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