A major change to how we save for retirement is happening. To encourage more people to save for their retirement, from October 2012 onwards, all employers will enrol their workers into a workplace pension if they’re not already in one. Very large employers are doing it first, in late 2012 and early 2013. Other employers will follow sometime after this, over several years. The aim is to help more people have another income, on top of the State Pension, when they retire.
The State Pension is a foundation for your retirement. If you want to have more, you need to save during your working life. The full basic State Pension in 2012/2013 is £107.45 a week for a single person. The government is getting employers to enrol their workers automatically into a pension at work so it is easier for people to start saving. You can opt out if you want to, but if you stay in you will have your own pension which you get when you retire.
What’s more, if you stay in, your employer will contribute to your pension and the government will also contribute through tax relief*. This means, unlike other ways of saving, being in a workplace pension means you’re not the only one putting money in.
*Tax relief means some of your money that would have gone to the government as tax, goes into your pension instead.
Minister for Pensions Steve Webb said: “This is the start of the biggest shake-up in the pensions system in a generation. If we don’t act now, tomorrow’s pensioners could find themselves poorer in their later lives. Not only will we get millions of people saving with a contribution from their employer, many for the first time, but this will also mean a massive shift towards a new culture of saving”.
To find out what this means for you, and the benefits of staying enrolled, visit www.direct.gov.uk/workplacepension