How many times do young people hear ‘You need to think about your pension fund’? The CAB can help to guide you through the ins and outs of the Automatic Enrolment, which is a Government initiative to help more people save for later life through a pension scheme at work.
It is now compulsory for companies to enroll their eligible workers into a pension scheme, and along with this, the employer must pay money into the scheme. At the moment automatic enrolment is being phased in and starts with the largest UK employers and this should be complete by 1 February 2018, at the latest. By October 2018 all existing employers will be required to offer workplace pension schemes to their eligible workers.
The reason for this scheme is that it has long been recognised that most people are not saving enough for their retirement and as a result, they are likely to struggle to live comfortably on just the State Pension. As a nation we are living longer, and whilst this is obviously not a bad thing, as everyone wants to live a long and interesting life, it has however resulted in a strain on the States benefits system, so a private pension is increasingly important.
Am I eligible?
To be part of the automatic enrolment of your company’s pension scheme you will need to:
- Be aged between 22 and State Pension Age
- Earn over the earnings threshold (£10,000 per year), and
- Work, or ordinarily work in the UK and have a contract of employment (i.e. so is a worker and not a self-employed contractor), or who have a contract to provide work and/ or services personally (so can’t sub-contract to a third party)
The amount that you and your employer pay into the scheme varies and can become a little confusing to understand so if you want to discuss your options further you can, of course, speak to your employer. As an organisation we have put together a guide to help you understand your pension options here or follow #pensionwise