Auto-enrolment Pensions for Staff
The Government has introduced a law to help make it easier for people to save for their retirement. It means that all employers must provide a company pension that meets certain standards, and automatically enrol eligible employees into the pension if they’re not already members.
Even if you are not eligible for automatic enrolment, you still have the option to join a company pension. This could be a great way to start building up your savings for retirement. Because, when you save into a company pension, you could also get extra payments from us and tax benefits from the Government.
We’d like to explain how these changes will affect you, and any steps you may need to take next.
How will I know if I am eligible?
You will be eligible for automatic enrolment if you:
- Are not already a member of the company pension
- Are aged over 22, but under state pension age
- Earn at least £9,440 a year (£787 a month or £182 a week)
- Work, or usually work, in the UK
How does this benefit me?
Our company pension provider is Standard Life, and our pension is a great way to help you save for your future. By paying into the pension you’ll benefit from the extra payments we make, as well as tax benefits from the Government.
How does it work?
- When you become a member of the company pension, you’ll pay in a minimum amount from your pay each week or month.
- For those paid weekly, the first deduction will be made from your pay received on 9th June.
- For salary staff, the first deduction will be the June salary paid 4th July.
On top of this we will also make payments into your company pension as follows:
- You pay 1% of your pensionable salary
- The company pays 1% of your pensionable salary
- Total paid into your company pension = 2%
How payments are made
- Payments to your pension are taken from your salary after tax and national insurance have been deducted.
- You get tax relief from the Government on every payment you make which means that if you’re a basic rate taxpayer, for every £4 you pay in, the Government will pay an extra £1 into your pension.
- This will happen automatically – you don’t need to do anything.
- If you pay a higher rate of tax, you can claim an extra 20-25% through your tax return.
- Remember that tax treatment depends on your personal circumstances and may be subject to change in future.
What if I don’t want to stay in the company pension?
Standard Life will write to you to confirm that you are a member of the company pension and explain the steps to take if you don’t want to stay in.
You can initially opt-out of the company pension and we will refund any payments you may have made. You’ll have one month in which to do this from the date Standard Life write to you to confirm your membership has started – they will also tell you how to opt out in this letter. If you do choose to opt-out you will be treated as never being a member of the company pension.
It’s important to think carefully before you leave the company pension, as it would mean you’d lose out on the payments the company makes into your pension, as well as tax benefits from the Government.
If you leave your company pension or stop making payments after the one month opt-out period has ended, we normally can’t refund your payments and the company payments will stop. However, the payments that have already been made into your company pension will remain invested until your retirement.
Does that mean I’m out for good?
Around every three years all employers have to reassess their workforce and automatically enrol eligible employees into the company pension. This assessment will take place on 6th June 2017. If you’re automatically enrolled as a result of this, you’ll be given one month to decide whether you want to stay in the pension or opt out.
If you were not eligible for automatic enrolment when you left or stopped making payments, we’ll continue to assess your situation. If you become eligible we’ll then automatically join you into the company pension. If this happens, we’ll write to you with more details.
If you want to join again before the three year assessment please contact pensionadmin@gelder.co.uk or the payroll department.
What if I am not eligible?
You can still choose to join the company pension. As soon as you join, you’ll also benefit from extra payments from the company and tax benefits from the Government.
You can choose to join your company pension if you are:
- Between 16 and 21 or between state pension age and 74, and earn at least £5,668 a year (£473 a month or £109 a week),
or
- You are between 22 and state pension age and you earn at least £5,668 a year but less than £9,440 a year (£787 a month or £182 a week)
The only difference is you won’t be automatically enrolled. Instead, you’ll have to let us know that you want to join.
You’ll still benefit from extra payments from the company and tax benefits from the Government.
If you earn less than £5,668 a year (£473 a month or £109 a week), you can still ask us to join you to a company pension. You will pay into this but you may not get any extra payments from the company.
If you have not joined the pension scheme as you are not eligible, we’ll continue to assess your situation and if anything changes, for example if you start to earn more than £9,440 a year (£787 a month or £182 a week), we’ll automatically join you into the company pension. If this happens, we’ll write to you with more details.
Our commitment to you
In the future, if the company pension ends through no action you have taken (for example, if we close the pension or change it so that it no longer meets Government standards), we have a commitment to join you into a new qualifying pension. We’ll make sure your new company pension starts on the day that your previous pension ended.
What happens next?
If you’re eligible you will automatically become a member of the company pension, set up with the payment level described in this letter and investing in the Standard Life Balanced Managed II fund which we have chosen as our standard fund. You don’t need to do anything.
You should take some time to consider if these options are the right ones for you and whether paying the minimum will get you the lifestyle you want when you retire.
There is a lot of information on the Standard Life website, see Standard Life's Stakeholder pension page.
Once you become a member, you'll be able to increase your payment levels and review where your money is invested. You can find out more about the options available to you by visiting the Standard life website or reading the information in your member joining pack. You can also contact pensionadmin@gelder.co.uk or the wages department for more information.
If you’re not eligible for automatic enrolment, you can still join the company pension.
All you have to do is contact pensionadmin@gelder.co.uk or the wages department for more information.
