Britons working to build their pensions might get a serious increase if the auto-enrolment scheme is expanded.

The Government has set out plans to scrap the decrease earnings restrict and to increase the minimal age from 22 to 18.

Alice Guy, head of Pensions and Savings at interactive investor, mentioned: “The Government’s plans to scrap the lower-earnings limit and expand auto-enrolment to 18-year-olds give lower paid employees a better chance of building a decent sized pension pot and achieving a comfortable retirement.

“Someone earning £20,000 between the ages of 18 and 62 could end up with £112,925 more in their pension pot after 44 years, due to the combined impact of an extra four years’ contributions and their own and employers’ contributions being based on their whole salary.”

Auto-enrolment is a scheme that obliges employers to supply a office pension for his or her workers, with the worker robotically added to the scheme with contributions taken from their wages.

At current, a employee must be at the very least 22 and earn at the very least £10,000 to qualify for auto-enrolment.

Ms Guy mentioned increasing the scheme might significantly profit ladies as they're extra more likely to be working part-time on a low earnings and usually tend to be residing in poverty in retirement.

She mentioned: “This policy could go some way to closing the pension gender gap which is currently 35 percent by the time women reach age 55.

“However, the Government needs to keep up the momentum as the timetable for this plan is not yet clear and there’s a danger that improving pension outcomes drops off the list as the next election looms.”

People who're auto-enrolled need to contribute at the very least eight % of their wage, with the worker contributing 5 % whereas the employer matches this with a 3 % contribution.

Some schemes permit the employer to pay in additional that means the worker pays in much less so long as the eight % minimal is reached.

Workers additionally pay in direction of their state pension by means of their National Insurance contributions.

An individual usually wants 35 years of contributions to get the total new state pension, which is £203.85 per week.

An individual can learn how a lot state pension they're on observe to obtain utilizing the state pension forecast tool on the Government web site.

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