A workplace pension is a way of saving for your retirement that’s arranged by your employer. Some businesses refer to these as occupational, work, or company pensions.
A percentage of your pay is put into the pension scheme automatically every payday. In most cases, your employer also adds money into the pension scheme for you.
What is Workplace Pension Auto Enrolment?
By October 2018 every employer must provide a Workplace Pension scheme to their staff and make contribution to their pension if they:
- Are aged between 22 and State Pension age.
- Earn more than £10,000 a year.
- Work in the UK.
This is called automatic enrolment.
Why was Workplace Pension Auto Enrolment introduced?
In the past, many workers have missed out on valuable pension benefits because their employer was not offering a pension scheme, or they didn’t join the company pension scheme through lack of understanding of the long-term impact.
It has long been recognised that most people are not saving enough for their retirement and as a result may not be able to live comfortably on just the state pension.
Auto Enrolment was introduced by the government to ensure more workers build a pension pot for the future and to relieve the increasing strain on the state benefit system, due to our ever-increasing ageing population.
How much do I need to pay into the workplace pension scheme?
The following link has been created by the pension regulator. You can use this to see if the new law applies to you or your business. The calculator is for employers but works for employees too.
Can I avoid Auto Enrolment?
As an employee you can avoid auto enrolment if you already participate in a pension with your current employer. However, as an employer you cannot avoid complying with the scheme if you have staff who fit the criteria.
This is a legal obligation and noncompliance could result in a fine.
What happens when you’re automatically enrolled?
Your employer will write to you when you’ve been automatically enrolled into their workplace pension scheme. The will advise you of the following:
- The date they added you to the pension scheme.
- The type of pension scheme and who runs it.
- How much they will contribute and how much you will have to pay in.
- How to leave the scheme, if you want to.
- How tax relief applies to you.
Why has my employer not enrolled me into a pension scheme yet?
On the assumption you are eligible, it may be that your employer has not reached the date which they are legally obliged to participate. However, by October 2018 all employers will have to enrol all eligible workers into a Workplace Pension scheme.
Contact Hobday-Stevens at email@example.com or call 01457 237007 to discuss the changes.