Auto Enrolment.

AUTO ENROLMENT – HOW WILL IT AFFECT ME?

Here’s some information you may find useful about the changes taking place in 2012.

WHAT IS AUTO ENROLMENT AND WHY IS IT HAPPENING?

Auto enrolment is where an eligible employee is automatically enrolled into their company pension. From October 2012 it will be a legal requirement for all UK employers to do this.

Many people don’t currently save enough for retirement or take advantage of company pension schemes that may be offered to them. As a population we’re living longer and have an increasing proportion of people at retirement age compared to working age. Auto enrolment is part of a Government initiative to increase private retirement savings.

WHAT ARE THE PLANS?

Auto enrolment will begin in October 2012 and will be introduced in stages with larger employers starting first. By September 2016 all employers will be expected to auto enrol their eligible employees into a qualifying scheme.

HOW WILL THIS AFFECT ME?

If you are aged between 22 and state pension age and earn over the income tax personal allowance (£7,475 a year from 2011/12) then you will be auto enrolled into your employer’s pension scheme. Contributions will be based on your income above the national insurance earnings threshold - currently £5,715. You and your employer will both have to pay a minimum contribution.

CAN I OPT OUT?

Yes you can. There will be an opt-out period of up to 60 days. If you decide to opt-out within this time then you will get a refund of any contributions taken.

WHAT IF I ALREADY HAVE A PENSION WITH MY EMPLOYER?

If your employer’s scheme meets the criteria for a qualifying scheme then you should be able to stay in it. Otherwise your employer will have to change the scheme or set up a new qualifying scheme.

All information is correct as at 27 October 2010 but is subject to change.