10,000 employers join workplace pension programme

From this week 10,700 employers will be auto-enrolling their staff into a workplace pension scheme

%VIRTUAL-SkimlinksPromo%From this week 10,700 employers will be auto-enrolling their staff into a workplace pension scheme.

A further 10,700 employers will be auto-enrolling their staff into a workplace pension scheme this week. This is the largest 'staging date' of the workplace pension initiative so far, involving the highest number of employers at once.
What is auto-enrollment?

The Government's workplace pensions scheme is a system in which employees are automatically drafted into pension schemes by their employers.

A percentage of your salary (0.8%) will be automatically taken from your pay, and will be matched by a 1% contribution from your employer and a 0.2% bump from the Government in the form of tax relief.
These figures will rise over time: in 2018, you'll be contributing 4% of your salary, with 3% coming from your employer and 1% from tax relief to make up a total of 8% of your salary in contributions per year.

You can arrange to make larger contributions if you wish to. Remember, just because you're automatically enrolled, this scheme is not compulsory and you are free to opt out. Around 10% of employees have opted out so far.

Take control of your pension with a SIPP

What's the point?

The idea is that a small portion of your pay is automatically placed into your pension pot. By making it an automated system, the Government hopes to get everybody into the habit of saving for retirement and contributing enough to ensure that they will receive a decent pension.

People earning less than £10,000 a year will not be automatically enrolled, nor will people under 22.

Now that medium-sized businesses are due to start the auto-enrollment process, thousands more employees will soon be saving more effectively for their retirement with the benefit of contributions from the Government and their employers.

The workplace pensions programme began in 2012, initially with the largest employers. This latest deadline is for medium-sized firms, but the UK's smallest employers won't have to launch their schemes until as late as February 2018. Up to the end of May 2014, 15,099 employers had confirmed their auto-enrollment scheme details, according to The Pension Regulator (TPR).

However, a report from TPR showed that almost 8,000 employers might have missed their staging date now. Hargreaves Lansdown says that it has heard anecdotal feedback from some employers that are "struggling to meet their obligations on time".

What does the new wave of enrollment mean for me?

If you work for a company which had between 62 to 89 employees on 1st April 2012, you should be receiving a letter from your employer detailing their workplace pension scheme.

There are a range of different firms offering workplace pension schemes for employers, so exactly how your money is invested depends on who your employer has gone with. However you will have the opportunity to pick an investment tactic that fits your appetite for risk.

Take control of your pension with a SIPP

Will you be willing to stick with minimum auto-enrollment contributions once they rise to 4% of salary?
Would you opt out even at this stage? Let us know your thoughts in the comments below.

7 ways to improve your retirement
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10,000 employers join workplace pension programme

If, like many Britons, you have failed to save the cash you need to maintain a comfortable standard of living in retirement, one option is to sell your home and downsize to a smaller property, using the money leftover to cover your living costs.
If moving out of the family home is too much of a wrench, however, the good news is that equity release schemes allow you to stay in your house or flat while still using the equity built up in it to provide some extra cash. The downside of the schemes, which work a bit like mortgages, is that you may not have much left to pass on to any children or other relatives.
But that's a small price to pay for a reasonable standard of living. For more information, try Age UK on 0800 169 6565.

Choosing the right annuity can have a significant impact on your retirement income. And as with most pensions, you automatically have what's called an 'open-market option' (OMO), you can scour the market for the highest annuity rate.
It is worth checking what your pension provider is offering first, though, as some companies offer guaranteed rates for existing customers that are likely to beat those available elsewhere. The Pensions Advisory Service on 0300 123 1047 is a good place to get some free advice.

On retirement, most people convert their pension fund into a guaranteed income annuity that pays out the same amount every month for the rest of their lives.
However, you can also choose an increasing annuity that pays out smaller amounts in the first few years but offers larger payments further down the line. This may prove a wise move if the rate of inflation remains at over 2%.

It is now easier to work later in life because the "default retirement age" has been scrapped.
People approaching retirement age and worrying about money can therefore choose to work for a few years longer - potentially transforming their financial situation. Other than the extra income from working, these people can look forward to higher state pensions, and higher annuity rates due to their greater age.
They can also benefit from bigger tax allowances and the fact that they no longer have to pay National Insurance contributions. Check out this nidirect website for more details.

You could get a much better rate with an impaired-life annuity if you have a medical condition that is likely to reduce your life expectancy.
Incredibly, even snoring, which is a common symptom of Sleep Apnoea could have an impact.
According to figures from MGM Advantage, a man with this condition could receive an extra £12,000 retirement income over the course of their retirement - or £571.44 extra money each year. Click here to find out more.

To maximise your retirement income, it is vital to ensure that you are receiving all the benefits to which you are entitled. These include the basic State Pension, and in some cases, the additional State Pension.
If you are on a low income, you could also qualify for the guaranteed element of Pension Credit, while those with some savings may get the savings element of this benefit. For more information about these and other benefits such as the Winter Fuel Payment, click here.

Many older couples rely on the pension income of one person - often the man. Should that person die first, the other person can therefore be left in a difficult position financially.
One way to prevent financial hardship for the surviving person is to take out a joint life annuity that will continue to pay out up to 67% of the original payments to the surviving partner should one of them die.
The disadvantage of this approach, however, is that the rate you receive will be lower. Again, the Pensions Advisory Service on 0845 601 2923 is a useful first port of call if you are unsure what to do.


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