1 Oct 2012

Q and A: pensions auto-enrolment

A landmark scheme to automatically place millions of people into workplace pensions begins today. Channel 4 News explains how the radical new scheme works.

What does this mean for me?

If you are aged between 22 and state pension age and earning more than £8,105 in 2012/13, you are eligible for auto-enrolment.

You and your employer will pay into the pension and the taxman will also contribute with tax relief.

In the first four years of the scheme, minimum contributions as a percentage of earnings will be 2 per cent, made up of 0.8 per cent from workers, 1 per cent from employers and 0.2 per cent coming from tax relief.

How will I know if I am being opted in?

Your employer will tell you when this is happening and provide you with information.

What if I want to opt out?

You can opt out but you will lose your employer contributions. The Government wants employers to re-enrol people who have opted out every three years, to try to persuade them to save.

How prepared are firms for the changes?

A government-commissioned survey of employers was published in July. Researchers found that while many of the largest firms were ready, there remained a “great deal” to be done to spread awareness about the reforms among smaller employers.

I work for a small firm – can I still join the scheme?

Not yet. Only the largest employers, such as the big supermarkets, will be involved in the first wave of automatic enrolment. Others will then join as the system is rolled out. The smallest firms will not sign up their staff until June 2015 at the earliest.