Following the Pensions Act 2008, starting from October 2012, up to 11 million workers will be automatically enrolled into a workplace pension. So the law on workplace pensions has changed. All employers are legally required to automatically enrol certain staff into a pension scheme and make contributions towards their staff’s pensions.
Employers will also have to tell their staff about the scheme giving them a choice to opt out and they will also require to allow other staff to join if they request to do so.
A work place pension is a great way to save for retirement and is all arranged by your employer. It can also be called a ‘Company Pension’ or a ‘Works Pension’.
A work place pension works by you paying a percentage of your salary into the pension scheme automatically every payday. In most cases, your employer and the government also add money into the pension scheme for you. The money is used to pay you an income for the rest of your life when you start getting the pension. You can usually take some of your workplace pension as a tax-free lump sum when you retire. If the amount of money you’ve saved is quite small, you may be able to take it all as a lump sum. 25% is tax free but you’ll have to pay Income Tax on the rest. This is our interpretation of current HMRC rules and regulations and may be subject to change.
As there can be significant consequences if the employer does not set up a work place pension it would be wise to seek financial expertise. Here at Futurity Financial Services Ltd we can guide you through the process, simplify everything and set up a work place pension that works for you and your employee.
Auto Enrolment is not regulated by the Financial Conduct Authority (FCA).