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Auto-enrolment pension

Auto-enrolment is a workplace pension that employers must offer certain employees as required by law. The employee doesn’t have to accept the offer or sign up to the pension, (they can opt-out as it’s called), but it is sensible to join as early as possible.

The Government’s aim of “pushing” people into a workplace pension, is to increase the proportion of employees saving for retirement, and it does appear to be working, as less than 10% of eligible employees have opted out so far.

The current definition of an eligible employee who must be offered a pension is, anyone aged 22 or over and earning a minimum of £10,000 per year from a single job.

There are also minimum contribution rules set by the Government, to ensure employers and employees make a proportionate contribution to your pension. These currently stand at 4% from employees, 3% from employers and 1% from the Government, making a total minimum contribution of 8% of qualifying income.

An 8% total contribution, is again, only a starting point for pension savings, and if you want to have a more comfortable retirement, you will need to increase this level of contribution, and make alternative arrangements.