Workplace pensions: Your rights

Man with papersPensions laws are changing due to government concerns about workers failing to save for retirement.

Consequently, your employer will soon be obliged to enroll you into some kind of workplace scheme. Here, we explain what this means for you.

The new laws come into force in October. Does that mean I will be enrolled in a workplace pension scheme later this year?
All employers will eventually be obliged to enroll staff into a scheme – as long as they are aged between 22 and the state pension age, earn more than £7,475 a year and do not already have an occupational pension.

But not all workers without workplace pensions will be enrolled in schemes this year because, while very large employers must comply more quickly, smaller companies can delay the process for several years.

Your employer's obligations include giving you the exact date, along with details about how to join, or to opt out of the scheme should you wish to do this, nearer the time.

How much will I have to contribute to the scheme?
Under the new rules, employers will eventually have to pay at least 3% of each staff member's salary towards an employee's scheme, while workers will contribute at least a further 4% and the government 1%.

However, these minimum percentages do not apply to your whole salary. Instead, they apply to your earnings between a minimum amount (currently £5,035) and a maximum amount (currently £33,540).

If, for example, you earn £18,000 a year, the minimum percentages will therefore be calculated on the difference between £18,000 and £5,035, which is £12,965.

What else is my employer obliged to do under the new regime?
If you're being automatically enrolled, your employer must write to you giving details of the scheme and what percentage of your salary will be paid into it.

And if you're already in a workplace pension, your employer must confirm in writing that the pension meets the government's new standards.

Once the scheme is up and running, meanwhile, your employer is obliged to pay your full contributions on time.

The company cannot, however, offer incentives to workers to opt out of their workplace pension or imply that you can only be employed if you opt out of the scheme.

Will the new pension rules be beneficial to me?
The Department for Work and Pensions claims that the auto-enrolment plan will "give millions of people the opportunity to save into a pension with a contribution from their employer".

But while only about four in 10 private employers currently provide a pension scheme, typical company contributions currently range from 6% to 10%. Workers who have already been saving towards their retirement for years could lose out as a result.
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