In the next few years all employers have the obligation to provide employees with a workplace pension scheme by law. Larger companies have already started ‘automatic enrolment’ which began October 2012. Each employer is allocated a staging date to which they must be ready to begin, smaller companies have until 2018.

What is workplace pension?
The workplace pension is now law it runs along side the state pension to guarantee an income on retirement. Some workplace pensions are called ‘occupational’, ‘works’, ‘company’ or ‘work-based’. In most cases, employers and the government also add money into a pension scheme for you.

How they work?
A percentage of your salary is put into the pension scheme automatically every month. The money is used to pay an income on retirement for rest of life. You can take some of your pension as a tax free lump sum.
State pension is not usually taken before 55 unless you’re seriously ill.

Who is affected by ‘automatic enrolment’?
All employers with staff earning more than £10,000 a year, aged between 22 and state pension age and work in the UK.

What employer must do?
If you don’t already offer workers a workplace pension scheme, you must set one up before you’re staging date.
If you already have a workplace pension scheme, check if you can use it for automatic enrolment.
You must make an employer’s contribution to the pension scheme for all eligible workers.
If you offer access to a stakeholder pension scheme, you must carry on taking workers’ contributions from their pay and send them to the scheme if the worker wants you to.
If you are self employed or the sole director of your own company, you won’t be automatically enrolled into a workplace pension.
The employees may not see any changes if they are already in a workplace pension scheme. Employees’ workplace pension scheme will usually carry on as normal. But if employers doesn’t make a contribution to employees’ pension now, they will have to by law when they ‘automatically enrol’ every worker.