Automatic Pension Enrollment
This is a scheme where as if you are not ready enrolled on a pension scheme, your employers will be required to automatically enrol all employees into the workplace pension. This will enable employees to have a pension for their future and receive an income other than the state pension when they are in a position to retire. There are Lots of larger companies that already have pension schemes running but by the year 2018 every employer will have to enrol their employees automatically.
- At least 22 years in age
- Not yet have reached state pension age
- Anyone who worksin the United Kingdom
- Earn more than the earnings trigger
Once employers have enrolled they will have to pay 1% of employees’ qualifying earnings which can be done either by:
o National insurance contributions
o The entire wage before tax deductions
However many employers choose to contribute more than the minimum contribution. Pensions will be made up of the employee’s contribution, the employer’s contribution and any tax relief from the qualifying earnings.
Employees can choose to opt out or leave at any point by completing an opt out form. If they opt out of the scheme within a month of joining they will receive the money they have paid in to be returned back to them. Opting out later will highly depend on the pension scheme rules and would normally mean you wouldn’t get the money back it will stay in the pension scheme until you are taking an income from it.