About workplace pensions
Automatic enrolment (workplace pension) the new pension reform that has been introduced by the Government. Enrolment is phased depending on the size of your company, with all enrolled by February 2018.
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.
How they work
A percentage of your pay is put into the pension scheme automatically every payday.
In most cases, your employer and the government also add 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 have 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.
You cannot usually take the money out before you're 55 at the earliest - unless you are seriously ill.
Workplace Pensions and the State Pension
The pension you get from the government is called the State Pension. You get it when you reach State Pension age.
The money you get from a workplace or other pension could make it much easier for you financially when you are retired.
A new law means that every employer must automatically enrol workers into a workplace pension scheme if they:
- are aged between 22 and State Pension age
- earn more than £10,000 a year
- work in the UK
This is called 'automatic enrolment'.
A pension is a long term investment. The fund may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax leglisation.
Check if the new law applies to you and when you may be enrolled into your employer's scheme
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.
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