Who is eligible for a workplace pension? Terry Dunbar from Budget Workplace Pensions gave a summary of workplace pensions at the Business Show at London’s Excel…
There is no difference between auto-enrolment and workplace pensions. If you employ people, you need to have a pension to put them in. The average individual retires with less than £30,000. It’s not a lot of money and the state pension is not looking like it’s going to increase dramatically – it is currently £110 a week.
Individuals that retire are often retiring below the poverty line, and if we aren’t careful we will end up as a nation of poor pensioners. The new auto-enrolment laws are in place to combat that. It is virtually a direct copy of the Australian system. This model has worked fantastically well, and people are retiring with a lot more money – a sensible amount to get them through. Individuals did initially have the option to opt out, but they no longer do.
Auto-enrolment says every employer must have a compliant work place pension scheme in place by their staging date for their employees.
Employees are separated into eligible jobholders, non-eligible jobholders and entitled workers:
• Eligible jobholders – aged over 22 and under 65, and earn over £10k per year. Must be automatically enrolled, they can opt out if they wish by the employer must not discuss this with them.
• Non-eligible jobholders – aged under 22 or over 65 and earn less than £10k per year. Can join the scheme if they choose to, and there are lots of savvy people choosing to do this.
• Entitled workers – no age criteria, must make less £10k per year. They can ask for a pension scheme but the scheme does not need to be AE compliant.
Employers must have compliant workplace pension schemes in place by their staging date or have written exemption from the Pensions Regulator.