If you work in a job that pays £10,000 a year (£192 a week) or more then you will be paying into a pension.

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It’s called auto enrolment because opting in to the pension is automatic. You can then opt out, but very few do so. Since auto-enrolment began in 2013, ten million people have begun paying into a pension at work for the first time.

That’s good news as far as it goes – but it doesn’t go far enough.

If you’re in an auto-enrolment pension your employer deducts a small percentage of your pay – usually less than four per cent of your gross pay – to go into the pension, and will also be paying well under three per cent themselves. These contributions are too small to buy a decent pension when you reach pension age. For many it will not
even be as much as the state pension – now £8,652 a year. It’s hard to say how much should go into a pension.

In the best workplace schemes the average is around a quarter of pay with almost all of that being paid by employers. So it’s important to pay in more than auto-enrolment rates if you can. Some employers have a better scheme that workers can join after a certain length of service.

If yours does, then join it as soon as you can. You should also try to persuade your boss to put in more – as much or more than you are putting in – or to let you put in more.

It’s never too late to pay into a pension – though the older you are the less time there is to save a decent amount. If you have opted out, consider opting back in again.
The £10,000 limit applies to each job so it’s possible to have two or three part-time jobs and not be auto-enrolled into a pension. However, any worker can choose to join the scheme and
if they earn more than £6,136 (£118 a week), their employer will have to chip in, too.

RT MONEY

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For information from My Pension Expert about independent retirement advice call 0808 301 7841

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