10 Apr 2019
Approximately 10 million British employees will now face a larger chunk of their wages being automatically transferred to a pension, as of their next salary, BBC reports.
New rates, which have been implemented on Saturday, mean that employees, employers and the government will all be funding more money into pension pots.
The new action will mean that several workers enrolled into a workplace pension will automatically be taking home less money every month.
It has also been announced however, that employees may opt to back out of the scheme at any given time, enabling them to make a choice whether they would like to save their money for the future, or invest it in the present.
The scheme will be effect ten million people aged 22 and over, earning more than £10,000 per annum and who were not previously committed to a company pension scheme.
Those eligible will be automatically enrolled into saving for retirement through a scheme which was introduced in 2012. As more workers start working or apply for new jobs, they will also be automatically enrolled.
This final amendment highlights the last increase in contribution rates, as planned in accordance with the scheme.
For instance, a worker earning £30,000 per year who is already part of the auto-enrolment scheme, this change will result in an additional £32 extra a month being set aside from their pre-tax pay into their pension pot.
Any doubt surrounding whether to carry on with these monthly contributions or back out of the scheme has been alleviated by a tax cut, which will also be implemented as of now.
Over 30 million people will now be contributing income tax on earnings beyond £12,500 a year, rather than above £11,850 a year.
According to analysts, choosing to opt-out of this automatic pension saving scheme would not benefit workers, as they would actually be losing money that their employer contributes to their pension savings.
"Anyone who chooses to opt-out is basically taking a voluntary pay cut," said Tom Selby, of senior analyst at investment company AJ Bell. "If you turn down the matched contribution [from an employer] you won't get it back elsewhere."
Read the latest Brexit News updates - EU expected to grant UK a Brexit extension