What is auto-enrolment?
In a nutshell, auto-enrolment is when your employer automatically adds you into a workplace pension scheme without asking you in advance.
Is this a new thing?
It’s actually been happening for a while now, since October 2012.
Before October 2012, employees had to take action to join their workplace pension scheme. But with auto-enrolment, you’re already opted-in. A huge benefit of auto-enrolment is that more people are automatically saving for their retirement than ever before. And that’s a big money win!
Do I HAVE to pay in to my workplace pension?
Your employer will tell you when you’re auto-enrolled. Though paying into a pension scheme is a great way to save for your future, you do have the right to opt-out.
If you opt-out:
- within 30 days of joining, you can request to get your contributions back
- after 30 days, your employer and your contributions will remain in the pension scheme.
- you’ll automatically be re-enrolled again after 3 years
Whether you work full-time or part-time, your employer has to enrol you in a workplace pension scheme if:
- you work in the UK
- you aren’t already in a suitable workplace pension scheme
- you’re at least 22 years old but under State Pension Age
- you earn more than £10,000 a year
How does it work?
Your employer has to make sure a minimum of 8% of your ‘Qualifying Earnings’ is paid into the pension scheme.
This minimum is generally 5% from you (which includes tax relief) and 3% from your employer.
The minimum contribution applies to anything you earn over £6,240 up to a limit of £50,270 (in the tax year 2022/23). This slice of your earnings is known as ‘Qualifying Earnings’.
Some employers apply the pension contribution to the whole of your earnings, not just to your Qualifying Earnings. If you’re not sure how your pension contributions are calculated, you should check with your employer.
If you don’t meet the age or ‘Qualifying Earnings’ criteria, you can still ask to join the scheme!