Workplace pensions

UK employers now have a legal duty to enrol most employees into a qualifying workplace pension scheme and contribute towards their retirement following changes in the Pensions Act.

Q. Is everyone being automatically enrolled into a workplace pension?
Starting from October 2012 (very large employers first), every employer has to enrol into a workplace pension, workers who:
• are not already in a qualifying workplace pension scheme
• are aged 22 or over
• are under State Pension age
• earn more than a minimum amount (£8,105.00 a year in 2012/13); and
• work or usually work in the UK

Q. I meet the criteria, when will I be enrolled?
 If you meet the criteria, the timing of when your employer will enrol you into a workplace pension depends on their size. Very large employers commenced in late 2012 and early 2013. Other employers will follow sometime after this, over several years. Your employer will give you the exact date nearer the time.

Q. What if I don’t meet the criteria to be enrolled?
If you don’t meet the criteria above when your employer starts enrolling workers, you will not be automatically enrolled into a workplace pension. However, you may be able to join the pension scheme if you want, if you are not already a member. Your employer will let you know (so long as you’re 16 or over, and under 75).

If you meet the criteria at a later date, for example you turn 22 or you start to earn more, and you are not already a member, then your employer will automatically enrol you.

Q. Why is this happening?
The aim is to help more people have another income, on top of the State Pension, when they retire.

The State Pension is a foundation for your retirement. If you want to have more, you need to save during your working life. Otherwise, you may reach retirement facing a significant fall in your standard of living. The full basic State Pension in 2012/2013 is £107.45 a week for a single person.

The government is getting employers to enrol their workers automatically into a pension at work so it is easier for people
to start saving.

You can opt out if you want to, but if you stay in you will have your own pension which you get when you retire.

Q. Who will pay into the pension?
You will pay into it. Your employer will pay into it too. They have to do this if you earn more than a certain amount (£5,564.00 a year in 2012/13). Plus most people will get a contribution from the government in the form of tax relief. This means some of your money that would have gone to the government as tax, goes into your pension instead.

Q. How much will I receive from my workplace pension when I retire?
It’s possible to get an idea of how much you will receive from your workplace pension by obtaining a ‘pension estimate’ (also sometimes known as a ‘pension projection’).

Q. What if I move jobs?
You may be automatically enrolled into a new workplace pension. This will depend on the size of your new employer, when you move, and if you meet the criteria listed in question one. Very large employers will automatically enrol all new workers who meet the criteria from late 2012 and early 2013 onwards. Smaller employers will follow sometime after this.
If your new employer has a workplace pension but they
don’t automatically enrol you, they may give you the option of joining if you want.

If your new employer doesn’t automatically enrol you, this will be because of one or both of the following reasons:

• they are not yet required to do so; or
• you don’t meet the criteria listed at question one

If you start a new pension (either ‘workplace’ or ‘personal’), you may be able to combine your old pension with your new one. Your new pension scheme provider will be able to tell you if this is possible and, if so, how to go about doing it.

Or if you want to, you might be able to continue making contributions to your old pension scheme after you’ve left your job. You would need to contact whoever runs your pension scheme to find out if this is possible, if there will be a cost involved and if you will get tax relief.
If you can’t or don’t want to do either of these options, then what happens to your pension depends on the scheme rules.

Nowadays lots of people move jobs several times in their working lives, so it’s important to keep track of the pensions you have. Keeping your statements will help you do this. If you have lost track of a pension, the government’s Pension

Tracing Service could help provide you with the contact details for that pension.

Q. What if I leave my job to become self-employed
or stop working?
You should think about what income you’ll have to live on in later life. Your employer will stop paying into your workplace pension, but you might be able to continue contributing, if you want. Alternatively, you might want to set up your own personal pension, or put other plans in place to give you an income when you retire.

Q. What happens to my pension if I die before retiring?
The rules vary depending on the type of scheme. If you can nominate someone, whoever runs your pension should ask you to confirm in writing who that person is when you first join the pension.

If they don’t do this, you should ask them for a nomination form. You can change your nomination at any time. It’s important to review it if your circumstances change

Please note: although in most cases the money will go to whoever is nominated, organisations who run pension schemes are allowed to pay it to someone else if this is needed. For example, if the person nominated cannot be found or has died.

Q. Can I take the money out?
Currently, most people can’t take money from any pension scheme until they are aged at least 55. The exact age you get your pension depends on the rules of the scheme.

Q. I’m paying into a personal pension already, what should I do?
 It’s possible to have both a workplace pension and your own personal pension, so you could choose to continue paying into both. Or you might choose to continue with just one of them. It depends on your circumstances – for example, what you can afford and what your personal and workplace pension schemes are offering. With your workplace pension, you will receive a contribution from your employer that you won’t get with your own personal pension. However, your own personal pension may have a guarantee about future income.

Q. I had a workplace pension in a previous job, what should I do about that?
You could leave it where it is. You will get it when you retire, so long as you were in the pension scheme long enough. The length of time needed will be in the pension scheme rules. Or you might be able to consolidate it with your new workplace pension. If you’re considering doing this, you need to obtain professional financial advice to assess if this is possible and, if it is, how to go about doing it.
If you have lost track of a pension, the government’s Pension Tracing Service could help provide you with the contact details for that pension.