Understand your enrolment into a company pension
In 2012, it became compulsory for employers to give their employees access to a pension. Since then, millions of people have been automatically enrolled into a company scheme, but what does that mean for you?
Invest in your future without having to apply for a pension yourself
Your employer will be paying into your pension as well
The money you pay into your pension will reduce the amount of tax held by HMRC *
If you move to a new company your pension plan will stay with you, ready to use when you reach retirement.
* Tax benefits are subject to change and depend on your individual circumstances.
When will you be enrolled?
The process started in October 2012, and by now all companies should have automatically enrolled their eligible employees into a workplace pension scheme (unless you opted out).
Whether you’ve been automatically enrolled or not, your employer should have written to you to explain the details.
Are you eligible?
Your employer will have to enrol you in a pension scheme if you:
- Work in the UK
- Are aged between 22 and State Pension age
- Earn more than £10,000 a year
- Aren’t already in an appropriate pension scheme
Even if you don’t meet these criteria and won’t be automatically enrolled, you can still join your employer’s pension scheme. All you need to do is let them know you want to join.
Benefits of auto-enrolment
Investing for your future
Auto-enrolment makes it easier for you to invest for your retirement. Rather than having to research and join a pension scheme yourself, you’ll be signed up to your company’s scheme automatically.
Once you’re enrolled, your employer will contribute to your pension too. The amount you and your employer pay into your plan is worked out as a percentage of your pre-tax income.
||Your employer’s contribution
|6 April 2018 to 5 April 2019
|6 April 2019 onwards
When you make a payment into your pension, you’ll also get some tax relief. Tax relief is given by HMRC on contributions that are paid into your pension by you during a tax year.
Your pension scheme or provider will tell you how tax relief works for you. In most cases, you have an annual allowance of £40,000 of benefits you can build up in pensions, including your employer’s contributions.
Tax reliefs are subject to change and dependent on your individual circumstances. Tax rules and allowances may differ in Scotland.
How much could you receive at retirement?
Once you’re a member of a pension plan, you’ll receive annual statements which give an indication of the kind of retirement income you could get for the amount you’re paying in. This will be based on a few assumptions, so you’ll need to read through it carefully.
Remember, the value of your pension can go down as well as up and you may get back less than you originally paid in.
Can you opt-out of the pension scheme?
Your employer has to enrol all their eligible employees, but you can opt-out if you want to.
Think carefully, though. If you opt-out, you’ll be missing out on the contributions your employer makes into your pension plan.
Remember, you can only opt-out after you’ve been enrolled in the first place, so look out for the details of how to do it after you’ve been enrolled.
You can opt back in to your company’s pension scheme if you have opted-out at any time. Just submit a request in writing (which can include an email) that’s signed or – if by email – confirms you have personally submitted it. Your employer may reject your request unless you meet certain conditions.
Your employer will also automatically enrol you back in once every 3 years if you’re eligible, even if you’ve opted-out.
Make sure you fully understand the implications of opting-out to your future and look into alternative options so you’re not caught short when you retire.
If you’ve been enrolled into a pension with us by your employer, find out how it works and what’s in it for you.
Take a look at our latest news and guides.
18 May 2018
How to use your home to fund your retirement
Find out if downsizing, taking in a lodger or equity release could help to pay for the retirement you have planned.
17 May 2018
Budgeting for retirement
Four lifestyle changes to prevent your pension pot draining.
14 May 2018
What if I need care?
There are different options if you need long term care when you retire. Take a look to consider how much they might cost.
14 May 2018
How dividend income is taxed
Find out how to make the best use of your your investments by understanding how the annual allowance works and how share income is taxed
18 Apr 2018
What is a pension?
Find out about the different types of pension and how they can help you enjoy a happy and secure retirement.
16 Apr 2018
Your Friends Life pension questions answered
Friends Life is now part of the Aviva group. Find out how this affects your Friends Life pension.
5 Mar 2018
Choosing a destination: cost of living, buying a property and healthcare.
1 Mar 2018
The costs of retiring abroad
We’ve compared the cost of living in the 3 top European destinations for UK retirees.
25 Feb 2018
Housing options for retirement
Plan now so you can afford the right accommodation for every stage of your life.
11 Feb 2018
How long will your retirement be?
Estimate the length of your retirement so that you can make the right preparations for the life you want to have when you stop working.
6 Feb 2018
When do annuities make sense?
Annuities can provide a stable income for your retirement, but they aren’t the only option. Find out if they’re the right choice for you.
21 Jan 2018
How the State Pension works
Understand when you can claim the State Pension and how much it’s likely to be to start planning for a secure and happy retirement.
17 Jan 2018
How much should you pay into your pension?
Get some help working out how much you need to pay into your pension to help you achieve the retirement lifestyle you want.
11 Jan 2018
Retirement and divorce
If your relationship ends in divorce or annulment, your retirement savings can be shared or split. Take a look at what this could mean for you.
10 Jan 2018
Can't afford to retire?
Find out how you could fix gaps in your retirement finances to give you the security and certainty you want.
7 Jan 2018
What to do after someone dies
Find out what you need to do in the days and weeks following a death, as well as some longer-term considerations.