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Pension Auto Enrolment – What You Need To Know

20th March 2017 Finance

The law on workplace pensions has changed. Under the Pensions Act 2008, every employer in the UK must put certain staff into a pension scheme and contribute towards it. This is called ‘automatic enrolment’. Auto enrolment is the UK’s new workplace pension’s initiative. Around 1.4 Million companies in the UK are yet to stage for auto enrolment.

The government estimates about 7 Million people are not saving at all for their retirement. Life expectancy is increasing and therefore the amount of their pension fund needs to be bigger to sustain this. Furthermore the government may not be able to afford to keep state pensions.

In October 2012, the government introduced a new law that was promoted to increase the number of people saving into a pension. Your employer if they have already staged is responsible for auto enrolling you into a pension scheme.

auto

Who can join?

  • Eligible – Aged 22- to state pension Age earning above £10,000 in UK
  • Non Eligible – Aged 16-21 or state pension age to 74 earning above £5,824 and up to £10,000 in UK you won’t be auto enrolled but you can choose to opt in
  • Entitled – Aged 16-74 earning below £5,824 your entitled you can ask to join but your employer isn’t obligated to contribute.

Percentages Taken from Employee

  • Before Oct 2017 = 1% of your monthly salary
  • Oct 2017-Oct 2018 = 3% of your monthly salary
  • After Oct 2018 = 5% of your monthly salary

Percentage of Contribution made by Employer

  • Before Oct 2017 = 1% of your monthly salary
  • Oct 2017-Oct 2018 = 2% of your monthly salary
  • After Oct 2018 = 3% of your monthly salary

The process once your company has staged for auto enrolment

Your company will know when they are staging for Auto enrolment through the pension regulator, this is a link to their website and will answer a lot of questions you may have.

www.thepensionsregulator.gov.uk

Once your company has staged the process is as follows:

  • You should receive a letter from your employer letting you know they are staging for auto enrolment and when to expect it.
  • Once staged if you are eligible you will be automatically be auto enrolled into a government pension
  • If you decide you don’t want this taken from your salary you have the option to opt out.
  • You only 1 Month to opt out. if opted out in the required time you will get a refund of any money already paid over.
  • Once opted out you can’t then opt back in for 3 years, this is the same if you haven’t opted out in time you can’t then opt out for 3 years.