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.
You should still find out all you can about the scheme, to help you decide whether it’s the best option for you. There are charges for investing in a pension and you’ll need to choose where to put your money.
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 and Wales.
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.
Are you making the most of your pension tax relief?
Everyone’s entitled to tax relief when they pay into a pension. Even non-taxpayers. So, what can you pay in and how much tax relief will you get?
Explore financial advice with confidence
This short video explains how our financial advice service works, the value and benefits, and how easy it is to arrange a no-obligation chat to decide on the next step.
We've made a huge difference to Jennifer
Jennifer wasn't keen on taking financial advice at first. Find out how we changed her mind and soon put her in a much better financial position.
6 ways to take control of your retirement planning
When planning your retirement, there are lots of things to consider, so here’s a checklist to get you started.
Stop your pension from running out early
How to make your retirement savings last a lifetime when taking a flexible income using drawdown.
Flexible pension withdrawals: 7 factors to consider
With greater flexibility over our pension savings in retirement, there’s more to consider before making one of the biggest financial decisions of your life.
When could equity release be the right solution?
We explain the different options for equity release, looking at the pros and cons of lifetime mortgages and home reversion plans.
Understanding your pension statement
Learn how to read your pension statement to plan your finances, understand charges, explore your investments and more.
What is equity release?
Equity release is a big financial commitment, so understanding what it would mean for you and your family is really important.
The value of financial advice
Where do you begin when it comes to seeking financial advice? Explore the difference between advice and guidance, independent and restricted in our financial advice guide.
Find your lost pensions
If you think you may have lost track of a pension pot, you shouldn’t worry. There’s a free government agency here to help.
The world of pensions
Find out about the different types of pension and how they can help you enjoy a happy and secure retirement.
Pensions jargon buster
Some pension terms can be a bit technical – or a bit vague. Don’t worry, we’re here to help.
How the State Pension works
Discover when you can claim your State Pension and how much it’s likely to be worth.
What is a lifetime mortgage?
Wondering what a lifetime mortgage is, and if it's suitable for you? This video explains what you need to consider when thinking about a lifetime mortgage.
Choosing a destination: cost of living, buying a property and healthcare.