Pension Automatic Enrolment Start Today

Pension Automatic Enrolment Start Today.

Automatic enrolment into a workplace pension starts from today.  For many workers, this will be the first time their employer has contributed to their pension savings.

Under the new scheme, some money from a worker's pay packet will automatically be diverted to a pension pot, provided they are aged over 22 and not already part of a workplace pension scheme.

To start with, this will only amount to a minimum of 0.8% of their pensionable earnings.  Their employer will, by law, be obliged to add the equivalent of 1% of their employee's earnings.  Tax relief adds another 0.2%.  Eventually, the minimum contributions will increase to 4% from the employee, 2% from their employer and 1% in tax relief.

These funds will be invested in the company's workplace pension scheme or by a scheme run by an insurance company, or by a government-backed scheme, such as the National Employment Savings Trust.

The first round of automatic enrolment will involve only the largest employers, such as the big supermarkets.  Others will then join as the system is rolled out.  The smallest firms will not sign up their staff until June 2015 at the earliest.  

Workers will have the option to opt out of the pension savings scheme, and will be given details before they start to see funds being diverted from their pay packet.

Our View
Allowing an opt-out makes this exercise a complete waste of time.  Those that can afford will join, those that prefer to spend their money elsewhere or indeed cannot afford, will opt out.  In short, there is no real difference to pension planning to what it was, those that want one will save and those that do not will not.  

Full schedule of dates and time for Pension Auto Enrolment 2012

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