I'm an Employee
A workplace pension is one of the most effective ways for you to save for retirement as both you and your employer typically pay in contributions to build up your retirement pot.
Introduced in 2012, automatic enrolment legislation requires employers to set up a company pension scheme for their employees. Employers need to automatically enrol eligible employees and make contributions on their behalf by their allotted ‘staging date’. Even if you’re not eligible for automatic enrolment you can still request to join your employer’s scheme and if you pay in, your employer will normally contribute too.
Automatic Enrolment Guide – Download
What are the benefits?
There are a number of benefits to joining your workplace pension scheme:
- Tax relief – To make saving into a pension more appealing, the taxman will contribute towards your pension fund. You automatically get 20% tax relief on your personal pension contributions. For instance if you invest £100, the taxman pays £25, giving your pension pot £125. If you’re a higher rate tax payer you may qualify for more tax relief (through your tax return).
Tax treatment depends on your individual circumstances and may be subject to change in the future.
- Employer – contributions. Depending on how your scheme has been arranged, you can build up your fund even more with the help of your employer’s contributions. This lets you save more and achieve a better income at retirement. Speak to your employer about what’s available to you.
- It can save you time – Your contribution will usually be deducted from your salary and will be invested , meaning you don’t have make any investment decisions or arrange anything yourself.
- It’s out of temptation’s way The money in your pension pot is tied up until you reach the age of 55, so you’re not tempted to dip in here and there along the way. Never forget, the main purpose of your pension is to help you enjoy a more comfortable retirement.
- If your employer has set up a workplace pension scheme with Legal & General Manage Your Account is our online service where you can monitor the performance of your pension at any time, view where your money is invested, and keep informed about current and new investment funds.
Manage your Account Leaflet – Download
Manage Your Account is a user-friendly service designed specifically to help in the years leading up to retirement. Giving you access to your information wherever and whenever you want, you can manage and monitor your pension pot to ensure it’s working just as hard as you are.
Manage Your Account offers:
- Flexibility – Monitor your pension pot and follow investment performance.
- Convenience – Keep an eye on your transaction history and view scheme charges and contributions.
- Choices – View benefit statements and explore your investment options.
- Education – View fact sheets about current and potential funds to keep you informed.
- Efficiency – Update your personal details and preferences without lots of paperwork.
Am I eligible for auto enrolment?
For automatic enrolment, employees fall into three categories depending on age and salary. Employees who already belong to a qualifying workplace pension scheme are not eligible for automatic enrolment.
Here’s a table to show which category you could fall into:
*2015/16 tax year figures **SPA – State Pension Age
Eligible jobholders will be automatically enrolled into their workplace pension scheme.
If you choose to remain in the scheme, you will benefit from contributions from your employer. You will both need to meet the minimum contribution levels.
If you’ve previously opted out of the scheme, you will be re-enrolled again every three years if you are still eligible.
Non-eligible jobholders will not be automatically enrolled into their workplace pension scheme but can ask to join.
If you opt to join the scheme, you will benefit from contributions to your pension from your employer. You will both need to make minimum contributions.
Entitled workers will not be automatically enrolled into their workplace pension scheme but can apply to join a company pension scheme.
Your employer will contact you to give you the opportunity to join a pension scheme but is not obliged to contribute on your behalf.
When will auto enrolment affect me?
Employers have been given various staging dates. These are dates on which they must start enrolling employees into workplace pension schemes. Staging started in 2012 with the larger employers first. It will continue until 2018 by which time companies of all sizes must comply.
Your employer will write to you with details nearer your company’s staging date.
How much will I have to contribute?
If you’re automatically enrolled or you’re a non-eligible jobholder and opt in to the pension scheme, a minimum amount of 2% must be paid into your pension pot. Your employer needs to pay at least 1% of this with you contributing the rest.
Contributions are being increased in stages so that by April 2019, you will be saving at least 8% in total as shown in this table:
The minimum levels of contributions and phasing dates for qualifying earnings are:
You and your employer may decide to pay more than the minimum shown above. If you decide to pay more than the minimum your employer still only has to contribute the minimum employer contribution. What matters is that your total contribution meets, or exceeds, the stated minimum.
How do I join the scheme?
If you are an eligible employee, you’ll be automatically enrolled into the pension scheme, and your contributions and your employer’s contributions will be put into the default investment fund.
Once you’ve been enrolled you’ll receive a notification explaining the pension scheme and your options to stay in or opt out.
If you fall into another category of employee, you will be given the option to join the pension scheme.
I don’t want to be part of the pension scheme?
If you are automatically enrolled into a pension scheme you have the right to opt out of it.
You can opt out within one month of your enrolment date or one month from receiving your enrolment notification.
If you opt out within this time, any contributions you have made will be returned to you.
How much can I save into my pension plan?
You can contribute up to 100% of your relevant earnings (salary) or £3,600 gross, if greater, into your pension plan. There are also upper limits to the amount you can personally contribute, these are £40,000 pa. or £1m in total. Obviously these limits are not relevant to most employees saving for their retirement.
The size of your pension pot will depend on how much you pay in, and for how long, together with the performance of your chosen investment funds. Generally speaking, the sooner you start and the more you pay in, the more you’ll benefit at retirement.