Increasingly, individuals are starting to understand the importance of have personal provision. The respected Behavioural Economist, Shlomo Benartza once said in regards to saving ‘the pain you’ll feel saving now, will be nothing in comparison to the pain you’ll feel in retirement if you don’t. And by taking advantage of the rules of compound growth, the earlier start saving, the better this will be. The purpose of auto enrolment is to ensure all individuals have some sort of personal provision when they retire. Workplace pensions goes a long way towards helping individuals save for their future.
Workplace Pensions was introduced in the UK on a staged basis from October 2012. It is widely recognised that state provision will not be enough for most individuals to retire on.
In 2005 the government’s pension commission called for wider and fairer pension coverage identifying that automatic worker enrolment and employer contributions are key to making schemes work. It is estimated that 7 million people are not saving enough to deliver the pension income they need or want.
Starting from October 2012, all employers must by law offer a workplace pension scheme. You, your employer and the government will pay into your pension if you’re enrolled into a workplace scheme.
Every employer must automatically enroll workers into a workplace pension scheme who:
There are different tiers available and the tier which is ultimately chosen to be most suitable will have different implications to the overall cost. The minimum requirements by April 2019, for each tier is:
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