Published on 31st March 2017
Auto-enrolment is a Government initiative where all workers will be automatically enrolled into a workplace pension.
New figures show that by 2020 over 10 million people are expected to be newly saving or saving more as a result of automatic enrolment. This means that an additional £17 billion a year is projected to be saved into workplace pensions by 2019/20.
By 2018, all employers will have been required to enrol their eligible workers into a workplace pension scheme if they are not already in one. So far, over 6.7 million people have been automatically enrolled into a workplace pension by more than 250,000 employers.
Three quarters of the total working population are now estimated to meet the age and earnings criteria for automatic enrolment ie. that:
• you’re not already in one
• you’re aged between 22 and State Pension age
• you earn more than £10,000 a year (£833 a month, £192 a week)
• you work in the UK
Employers must enrol and make a contribution for all staff who meet the criteria. You can choose to opt out of the scheme, but your employer is obliged to enrol you back in automatically every three years. You can opt out again if you still don’t think it’s for you, but you should think carefully before you do – especially if you don’t have any other pension savings.
How much you’ll save will depend on your salary and the specific scheme you’ve been signed up to. By 2018 the minimum contributions will rise to the equivalent of 8% of a worker’s earnings – this will be made up of a 4% employee contribution, 3% from the employer and 1% from tax relief. You can however choose to increase your own contribution for a bigger final pot when you are ready to retire.
Contains public sector information licensed under the Open Government Licence v3.0.
If you’d like expert advice on your retirement choices, please get in touch.