Pension changes this April - what do they mean for you?

The rules about workplace pensions are changing this April. What does this mean for you and your DMP? Read on to find out.

pension

If you’re employed, the amount of money you pay into your workplace pension will go up next month. Under the auto-enrolment rules, the minimum contributions from employees will increase from 3% to 5%. And the contribution paid by your employer will also go up, from 2% to 3%.

Let’s say you earn around £27,000 a year and pay in the auto-enrolment minimum to your workplace pension. Last year, you probably paid in around £500 altogether. In 2019-20, this will go up to around £850. That’s an increase of around £30 per month.

It’s good to be prepared for this slight drop in your disposable income. But when it comes to pensions it’s important to think long-term: most people would find it very difficult to live on state pension alone.

We understand that when you’re focused on paying off your debts as quickly as you can, it can be difficult to prioritise your future. You can opt out of your workplace pension scheme if you want to. But to do so would mean missing out on the tax relief and the contributions from your employer that together effectively double the amount you put in. It would be like turning down a pay rise!

Of course, your pension contributions may not be the only expense going up in April. In many areas, your council tax and/or other bills may go up around this time too. On the other hand, changes to tax thresholds might leave you with slightly more take home pay. Either way, if taking all the changes into account, you find it hard to keep up with your DMP payments, don’t struggle in silence. Get in touch with us on 0161 672 8989 and we’ll do what we can to help.

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