Back in 2012, the UK government brought in the auto-enrolment of employees into workplace pension schemes. This was in response to the increasing life expectancy of the UK population. The government acknowledged that the State Pension will not be enough to live on for many. They wanted to encourage saving for retirement to start earlier in people’s working life. With auto-enrolment, employers are required to enrol all eligible employees into a qualifying pension scheme and make contributions to it.

To make sure you’re getting the most from your pension, it’s crucial you understand about workplace auto-enrolment. Read on for all you need to know about contributions, eligibility and consolidating your pensions.

Eligibility for auto-enrolment

Whilst all employers must provide a workplace pension scheme, there is eligibility criteria that must be met. Employees must be between 22 years of age and the State Pension age. They must earn over £10,000 per year and be employed to work, ordinarily, in the UK.

Contributions

The total minimum contribution to a workplace pension is 8% of an employee’s qualifying earnings. This includes salary, wages, commission, bonuses and overtime. It must include at least 3% from the employer, with the employee making up the rest. The employee’s contribution benefits from tax relief, as it is deducted from their salary before tax is calculated. Some employers choose to match the employee’s contributions, as an employee benefit.

Finding lost pensions

If you have worked for more than one employer since 2012, it is likely you’ll have been auto-enrolled into pension schemes at each. Keeping track of these pensions is important. By not knowing which pension schemes you have money held with, you could miss out in retirement. Recent research has found that around £37bn in pensions are “lost” in the UK. Not sure if you’re money us part of this statistic? Willday Wealth Management are here to help. Our Find My Pension service allows us to track down your pensions and help you consolidate them.

Consolidating your pensions

Consolidating your pensions into a single pot can make managing your retirement savings easier. It will allow you to better control your investments and make sure your money is working in the best way possible for you. Knowing how much money is in your pension pot also allows greater retirement planning. This could reduce financial stress as you approach retirement.

What this means for you

Being a part of a workplace pension is a great way to build your retirement funds. The money contributed by your employer will boost your pension without it costing you any more. It is important to keep track of your pension scheme providers, however, along with how your pension pot is growing. Otherwise, you may miss out on funds that will make your retirement dreams come true.