A workplace pension is a simple step to a better future.
When you contribute so will your employer and the government.
The government has introduced a new law designed to help people save more for their retirement. It requires all employers to enrol their workers into a workplace pension scheme if they’re not already in one.
What’s a workplace pension?
A workplace pension is a way of saving for your retirement arranged through your employer. It’s also sometimes called a ‘company pension’, ‘occupational pension’ or ‘works pension’.
Will I be enrolled?
Yes, if you’re 22 or over, under State Pension age, work or usually work in the UK, earn more than £8,105 a year, and are not already in your employer’s pension scheme.
When will I be enrolled?
The timing of when employers will automatically enrol workers depends on their size. Very large employers are doing it first, in late 2012 and early 2013. Other employers will follow sometime after this, over several years.
Do I have to stay in the pension scheme?
You can choose to opt out of the scheme if you want to, but if you stay in you will have your own pension which you get when you retire.
Why is this happening?
We’re all living longer lives and likely to spend around 20 years in retirement. Millions of people are not saving enough to enjoy the lifestyle they’d like when they retire. The State Pension should be seen as a foundation – relying on it alone could mean that you’ll have a significant fall in income when you retire.
What are the benefits?
- Your employer will enrol you automatically so it’s easy for you to start saving. You don’t have to do anything.
- Your employer will contribute to your pension.
- The government will also contribute to your pension, through tax relief. Tax relief means some of your money that would have gone to the government as income tax, goes into your pension instead.
- Usually, the younger you are when you start paying into a pension the better. The money has more time to grow.
- Being in a workplace pension is worth considering, even if you think you’re too old. Unless your retirement is just a few weeks away, there’s still time to build up some money.
Where can I find out more about how it will affect me?
To find out what this means to you, visit www.direct.gov.uk/workplacepension