Auto Enrolment – A brief guide

March 18, 2012 · Posted in Business · Comment 

Auto Enrolment?

From October 2012 onwards, your employer will have to auto enrol you into a employer contributed pension. This means you will have a pension pot, into which you will have to contribute a percentage of your yearly wage Your company will have to contribute a further percentage and the Government will pay a percentage in the form of tax relief.

What is the purpose of Auto Enrolment?

This is mainly happening because we are living longer, but only a few people are building pension funds for their retirement. The problem with this is that in the future when we all retire, there might be a large financial drain on our welfare system and the UK will not be able to afford the older generations That means the Government has to force us to put away something for our retirement so that we are not forced to live in poverty.

Do I have to save for my pension?

The law does not currently require you to have a pension. Your employer is obligated to auto enrol you into a workplace pension, but if you don’t want to enrol, then you have to notify your boss of your decision. However, you should know that you will be missing out on additional investment that you might not receive if you opt out.

What will my workplace pension be worth?

It is difficult to know how much you will receive from your workplace pension because it depends a number of factors including age, how much is in your pension fund and the type of pension you have

What age can I draw my pension?

This entirely depends on whether the Government changes the law, but the current pension laws say that you can take your pension at the age of 55 and you must have started receiving your pension by the age of 75.

Summary The Auto Enrolment 2012 pension changes will affect us all in some way. It is imperative that you learn as much as you can about Auto enrolment before making an important decision that might change your life.