Am I eligible?

UK workers aged between 22 and state pension age and earning at least £10,000 per year, must be auto enrolled. The earnings level is subject to annual review and may change. Plus, there is a muted change that workers age 18-21 may be included in the future. 

UK workers between the ages of 16 and 74 with earning less than £10,000 a year but more than £6,240, also have the right to join voluntarily (known as opting in). 

Should I join?

Your employer should have automatically enrolled you and given you all the information you need about the scheme when they did so. You will be in the scheme unless you opt-out. So, you must make a conscious decision and sign certain paperwork not to be in the scheme. 

The benefits of joining are several: including the fact your employer will add a contribution on top of yours, you will get tax relief on your contribution and the whole thing is automated through your payroll. 

How much should I pay in?

You will have to meet the minimum amount set down by legislation or the scheme rules. However, you can pay in more up to very generous levels allowed by the government. If you want to pay in more, you should check whether your employer will match this and, if yes, up to what level. 

Otherwise you could pay extra amounts into the Workplace Pension scheme or extra amounts into a separate personal pension. The decision on all these matters should be taken after you have received appropriate advice. It goes without saying that most of the time the more you can pay into your pension the better. 

What about my previous pensions from past employment?

In most cases you should be able to move an old pension across to your new workplace pension scheme. However, some schemes may have restrictions or special terms about allowing transfers in, so it is worth checking. It is VERY unlikely if your old pension scheme was a defined benefit pension with valuable guarantees that you would want to transfer this across – as you would lose the guarantees. 

You can have as many pensions as you like during your working and savings years, so you don’t have to transfer an old pension to your new scheme, you could choose instead to transfer to a new personal pension of your choosing and there could be good reasons for doing so. 

There are many options and, as always, with these things it is best to take advice because the most suitable option will be circumstantial to your requirements and position. 

When can I take the pension?

The pension rules today allow you to access your pension pot or pots, with considerable flexibility and freedom, from age 55. You have many options to draw upon the pension or take income. 

You can even start drawing upon the pensions and continue to work, so the link that used to exist between retiring and your pension starting has been broken. One word of caution, though – if you start drawing out money from a pension, it can restrict your ability to make future contributions. 

What happens if I have more than one job?

Each job is treated separately for auto-enrolment purposes. Your different employers will check whether you are eligible and will enrol you into the scheme if you are. You can be in more than one scheme, opt-out of any scheme, just as you can with one job. 

It may be that you earn more than £6,240 per year but less than £10,000 per year in any of your jobs. If so, you won’t be automatically enrolled in that employer’s scheme, but you can ask to join. And if you do your employer also has to contribute. Even if you earn less than £6,240 per year you can still ask to join, but your employer does not have to contribute. 

What funds or strategy should I pursue?

This is a question which is arguably one of the most important, yet it is often left unanswered. In many cases once an employee joins a scheme, they simply choose funds randomly or select the so-called ‘default fund’. We are talking here about Defined Contribution Workplace Pension Schemes (which is most of them). 

This means quite simply; you and your employer pay in the sums every month and that money gets allocated to a fund or funds. Those funds are likely to be into underlying investments such as shares, government bonds, property and cash. 

The funds produce a return, which in many cases will be unknown in advance and subject to ‘performance’. If the funds perform well, your pension pot will grow quicker, less well and the pot will grow less quickly. Indeed, with some funds there is no guarantee it will grow at all and could even fall in value. 

So, the funds you select, how it is managed and how often you check, review and adjust could all be crucial to how much you build up. And remember this is the amount of money you will get to enjoy in retirement. The trick is to avoid simply opting for a random or blind selection or the default fund - until you have got expert help and advice. The extra amounts a good strategy may produce, as opposed to an average or poor strategy can escalate into significant differences by the time you reach your retirement. 

What happens if I move on?

Although the workplace pension is offered and run by your employer, it is your pension. Therefore, should you leave that job, you keep the pension for yourself. A new employer should also offer a workplace pension. 

Whether or not you can move your old scheme into your new scheme depends on the schemes and their terms, it is not always possible. If it is, then you must decide whether it is a good idea or the right thing to do (take advice!). 

Remember one thing though, the self-employed do not currently have access to workplace pensions, so if you leave employment and switch to self- employed you will have to sort out your own personal pension.