Why is Auto enrolment happening?
In the UK the government has recognised and felt that workers are not preparing and saving enough for their retirement.
As a result of this when people come to retirement age they find that they are not able to live as comfortably as they thought they would on the state pension.
Moreover, with more people living longer, the state pension system has been strained to almost breaking point, as a result of this private pensions are increasingly important in providing the continued prosperity of people in their retirement.
The Pensions Act in 2008 introduced reforms to the pension system in the UK in an attempt to encourage workers to save more for their retirement.
The Pensions Act 2008 requires all employers to enroll eligible employees into a pension scheme which must be offered by the employer.
These reforms are now commonly referred to as automatic pension enrolment.
The reforms introduced under the Pensions Act of 2008 also recognises that not all employees will be eligible for automatic pension enrollment, and that some workers in the UK will not qualify at all. For example, the self employed.
However, there are provisions under the Pensions Act 2008 for workers who do not qualify for the scheme to join schemes and begin to build their retirement pot.
The Pensions Act 2008 ensures that all eligible workers will be automatically enrolled into a pension scheme and any deduction for said scheme will be made and paid by the employer and pay into the pension scheme on their behalf.
Joining an employers workplace pension scheme
As of February 2018, all UK employers are required by law to automatically enroll their workers in a workplace pension scheme.
This is known as automatic enrolment. So you should not have to do anything, but you may have to check if you are eligible.
Your employer should contact you with the options available to you for your pension scheme and provide information on the pension scheme that they are going to provide.
If you wish, you can opt out of the pension scheme, however, this is advised against.
It should be noted that not all UK workers will be eligible for automatic pension enrollment in their workplace pension scheme.
If you meet the eligibility criteria you will be automatically enrolled, and will not need to make any further action if you want to remain in your workplace pensions scheme.
If you are ineligible for automatic enrollment in your workplace pension scheme you may have to take further action.
If your earnings increase you may find that you have been automatically enrolled, or if your pay for even one period has increased you may have been enrolled.