Auto-Enrolment
Hassle‐free employer‐contributed pensions
Auto-enrolment is a relatively new venture in workplace pensions. With life expectancy increasing rapidly and fewer than 1 million of the UK workforce committed to saving something extra for later in life, it was clear significant changes needed to be made towards the way the views of saving towards retirement.
How it started…
Introduced in 2008, pension auto‐enrolment is the process where employees are automatically enrolled a private pension scheme provided by their employer, to sacrifice a small percentage of their income, a pre‐tax deduction, which is paid directly into their pension. What’s more, whatever the employee contributes, their employer pays in too. However, employees must be provided with the choice to opt‐out of such a plan.
The process initially only concerned the largest employers and in 2013 only 1 million UK employees were participating in an auto‐ enrolment pension scheme. Though in 2017, the number was reported to stand at 7.7 million, which is an increase of 31% since the reforms began and a total of 78% of the entire UK workforce.*
* The Pensions Regulator ‐ Automatic Enrolment: Commentary and Analysis, July 2017.
How it's going…
Since October 2018, all UK companies regardless of their size with at least one tax-paying employee over the age of 21 have been legally required to automatically enroll all of their employees onto such a scheme, ensure that they understand the process and that they may choose to no longer participate.
Some schemes offer an investment option in order for the employee to increase the value of their pension. Some schemes are configurable and allow the employer to contribute a higher percentage than their employees. These and many other options can be discussed as part of your free no‐obligation quotation.
It's clear to say that the scheme has proven to be a success and the majority of employees across the UK choose to continue contributing to their future livelihoods.
