Workplace pensions

A guide to workplace pensions

October 2012 was when automatic enrolment and workplace pensions were introduced as a response to the challenge of an aging population the horrific headlines about pension pots with huge deficits and the lack of savings people had to rely upon during retirement.

The Government plan was for a staged introduction to workplace pensions and automatic enrolment whereby employers automatically enrolled their employees into a pension scheme. By February 2015 all employers would have implemented workplace pension schemes.

The Pensions Regulator announced in February 2019 that 10 million people were now saving into a pension scheme who otherwise may not have contributed previously.  Whilst employees still can opt-out of saving into a pension scheme, employers are required to auto enrol all eligible employees into their nominated workplace pension scheme and encourage them to contribute.  

The introduction of workplace pension schemes and automatic enrolment has led to businesses helping to create a savings culture where employees are contributing into a pension scheme or even if they opt-out are now much more aware that they should be saving for their retirement and not rely solely upon a state pension.

The benefit to an employee is that a total contribution rate of 8% their salary is paid into their pension each month, with the employer having to contribute at least 3% of that.

Most SME’s will have opted for the NEST scheme but they should regularly review their pension scheme are still best suited to them and their employees.  In addition to this,inviting a qualified pensions advisor into the workplace to provide pension advice/reviews is a great way to add value to your staff and help retain and attract best candidates.