From October 2012, under reforms introduced in 2008, employers will start enrolling workers into a workplace pension, if they meet certain criteria
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What is a workplace pension?
A workplace pension is a way of saving for retirement arranged through employers. It is sometimes called a ‘company pension’, an ‘occupational pension’ or a ‘works pension’.
How it affects you
Your employer will enrol you into a workplace pension if you:
Are not already in a pension at work;
Are aged 22 or over;
Are under State Pension age;
Earn more than £8105 a year;
Work in the UK.
This article is based on information provided on the website www.direct.gov.uk; search for ‘pensions and retirement planning’
Employers will write to their employees to explain how the changes affect them. Employees can choose to opt out of this pension if they want to, but if they stay in they will have their own pension when they retire. Those who are already in a work pension scheme that meets the government's new standards will not be affected.
When this is happening?
When employees will be enrolled depends on the size of the organisation they work for. Large employers are doing it first, in late 2012 and early 2013. Other employers will follow sometime after this, over several years.
Why this is happening?
People are living longer; some could be retired for 20 years and they need to think about how they will fund it.
The State Pension is a foundation for retirement. But if you want to have more when you retire, you may want to consider contributing to a workplace pension. The full basic State Pension in 2012/13 is £107.45 per week for a single person. The government is getting employers to enrol their workers automatically into a workplace pension to make it easier for people to start saving.
Benefits of staying in a workplace pension
A pension is a way of saving money to provide you with an income when you retire. According to the government, there are many benefits to having a pension at work:
Your employer will pay into it. This contribution from your employer means your pension can build up more quickly than if you were saving for your retirement on your own.
The government will also pay into it, in the form of tax relief. This means some of the money you earn, instead of going to the government as income tax, now goes into your pension instead.
Your workplace pension belongs to you, even if you leave your employer in the future.
As your employer will automatically enrol you into this pension, it's a hassle free way of saving while you earn.
Being in a workplace pension is an important step towards giving yourself the lifestyle you would like in later life.
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