Automatic enrolment turns 3

Coloured balloons floating into a blue sky with confetti Automatic enrolment turns 3


MoneyPlus Features Team

12th October 2015 at 2:26pm

This month, the great pensions experiment – automatic enrolment – turned 3.

We’re all in

For those of you who have seen the adverts, many of which say “I’m in,” you may be aware, this is the Government’s big ‘nudge’ to get people saving for retirement. Anyone over the age of 22, earning above £10,000 per annum, will be automatically enrolled into their employer’s pension scheme when they start work.

Even those employees who don’t meet those thresholds will usually have certain entitlements to join of their own accord, should they wish to.

Automatic enrolment – A phased approach

The automatic enrolment duties for employers are being phased in over about 6 years, starting back in October 2012 with the UK’s biggest employers and working down to the very smallest employers by 2018. By then, even those employing just one person will have to have a pension scheme in place and enrol their employee if he or she is eligible.

5 million auto enrolled

So far, over 5 million people have been automatically enrolled, and less than 10% have chosen to opt out; it’s not compulsory for employees to stay in, but most are. Estimates suggest there are as many people again to be enrolled over the next 3 years.

Contributions have started low – around 1% from the employer and 1% from the employee (with a subsidy from the Government in the form of tax relief). They will increase to 3% from the employer and 5% from the employee by 2018.

Broadly speaking, if you work for a company with more than about 50 people employed, it will probably have a pension scheme in place and a duty to put eligible employees into it. Those working for smaller companies may have to wait a little longer, but the pension scheme will be there at some point between now and 2018.

Help if you need it

Every employer will have had some form of communication from the Pensions Regulator about what they have to do regarding automatic enrolment, and when, so it’s worth asking them if you’re not sure.

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