MONEY IS USED TO PAY YOU AN
INCOME FOR THE REST OF YOUR LIFE

A workplace pension is a way of saving for your retirement that’s arranged by your employer. Some workplace pensions are called ‘occupational’, ‘works’, ‘company’ or ‘work-based’ pensions.

A percentage of your pay is put into the pension scheme automatically every payday. In most cases, your employer and the Government also contribute money into the pension scheme for you. The money is used to pay you an income for the rest of your life when you start getting the pension.

You can usually take some of your workplace pension as a tax-free lump sum when you retire. If the amount of money you’ve saved is quite small, you may be able to take it all as a lump sum. 25% is tax free but you’ll have to pay income tax on the rest.

‘Auto-enrolment’
New legal duties, from October 2012, require employers to automatically enrol their eligible employees into a qualifying pension scheme. The reform will be ‘staged’ over a six-year period depending on the size of the employer.

The new law means that every employer must automatically enrol workers into a workplace pension scheme if they:

– are currently aged between 22 and State Pension age
– earn more than £9,440 a year
– work in the UK

This is called ‘automatic enrolment’. You may not see any changes if you’re already in a workplace pension scheme. Your workplace pension scheme will usually carry on as normal.

But if your employer doesn’t make a contribution to your pension now, they will have to by law when they ‘automatically enrol’ every worker.

If you are an employer you need to make sure that your business is prepared as workplace pension reform becomes applicable to you. See our checklist of things you need to consider:

– I know my staging date

– I have assessed my workforce and I know which employees are eligible jobholders

– I have reviewed my pension arrangements and have confirmed that I have a qualifying pension scheme in place

– I have communicated the changes to the
entire workforce

– I’m ready to enrol all eligible jobholders from my staging date

– I’m ready to register with The Pension Regulator

– I have the systems in place to maintain accurate records

– I’m ready to contribute to workers’ pensions

– I’m ready to deal with opt-out requests