What is automatic enrolment?
Good news. We’re living longer, healthier lives so in theory we get to have a longer retirement. But what many of us are finding is that we can’t afford to retire completely. The State Pension isn’t enough to live on comfortably, so we may need to keep working.
A workplace pension all set up for you
With automatic enrolment your employer sets up a workplace pension scheme and enrols you in it.
You automatically make contributions to this pension, so does the government and your employer. This money builds up in your personal pension pot and you can spend it when you retire, or any time after you reach 55 (or age 57 from 2028).
Most employed people are automatically enrolled into a workplace pension, but not everyone.
You need to:
- be over 22 years old but under State Pension age
- earn more than £10,000 a year (2017/2018)
- work in the UK.
Don’t worry if you don’t meet these criteria. Your employer won’t automatically enrol you, but you may still join The People’s Pension. You should talk to your employer if you wish to join.
Payments into your pension
The great thing about a workplace pension is that it’s not just you who makes payments to your pension.
Your employer will contribute and so will the government. Payments made by you, your employer and the government will rise over the next few years from a minimum of 2% of your qualifying earnings now, to a minimum of 8% of your qualifying earnings from April 2019 onwards.
Your employer will let you know exactly how much will be going in to your pension. In the meantime, the Money Advice Service provides a handy workplace pension contribution calculator:
Want to find out more about automatic enrolment?
Watch our 5 minute video to find out what automatic enrolment could mean for you: an introduction to auto-enrolment (£17.5k example) »
Next: Opting out