Pensions Auto Enrolment- All You Need To Know About It

By Author: Mark Brooke
Total Articles: 4
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Pensions always remain a shake-up for the generations. The introduction of Pensions Auto Enrolment has pushed millions of employees to save for their retirement. Read on, to know more about this amazing money saving scheme.


About the scheme


On an average, we all are likely to live 20 years in retirement. But most of us fail to save sufficient money for our retirement. Automatic enrolment not only helps people to overcome their "savings inertia" but makes saving for retirement easy. As the employer through this scheme automatically enrols the employee, so the chances for not saving for retirement are reduced.

Individuals that can benefit from this scheme

The employees aging between 22 and pension age of the state who earns over £8,105 per year is eligible for Automatic Pension Enrolment. Note that only those employees that aren’t enrolled with workplace pension scheme are eligible for this scheme. Even the employees that do not belong to that age ...
... group can also opt for the scheme, if they wish to. But here the minimum age requirement of the individual is 16 and maximum 75, and the person should be earning over £5,564 per year. The best feature of Automatic Pension Enrolment that the company where you are employed will also be liable to pay a minimum contribution for the scheme. Companies will be liable for enrolling it’s workers aging 16-74 with less earning, but the company won’t pay any contributions for them.

Amount of contribution

The minimum contribution starts at 2% of gross earnings of the worker, of which minimum 1% is to be paid by the employer. This minimum will rise up to 8% by October 18, which will make up minimum 1% tax relief, 3% from the company, and 4% from the worker. Note that these percentages do not apply to the while salary of the individual and only to the sum earned up to the maximum limit, which is £42,475 currently.

Opting out option

Employees have the option of opting out, if they want to. According to the government, forcing the employers for contributing and bearing, the tax relief may encourage the individuals to stay, but it’s estimated even after that a number of individuals may choose to opt out. As there are a number of people out there, that may not find the scheme affordable. The individuals will have complete one month for submitting, "opt out notice" to their employer and contributions will be returned that are made already.

Reliability and trustworthiness of the scheme

Auto-enrolment is a reliable scheme for the employees. With the introduction of this scheme almost a quarter of employees get enrolled automatically. The best part is that they are enrolled in their 20s. This makes the person stress free of their retirement and they will have enough money with them when they are retired. Though the individuals aging 60 and above won’t find this scheme very much beneficial for them, but overall it’s still worth considering.


There are various aspects related to a pension plan which needs to be taken into consideration. These aspects include critical and crucial calculations, making assessments, making adjustments and various other aspects.