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A guide to

Workplace Pensions

Employees Guide to Auto-Enrolment (Entitled Workers)
As an employer we will be providing a workplace pension by ( ) (please insert the date). This note provides an overview of the general workings of a workplace pension scheme. We will write to you again if we require any information and to inform you of the workplace pension scheme we have chosen.

A workplace pension is a way of saving for your retirement that’s arranged by your employer. Other names for workplace pensions are “occupational”, “works”, “company” or “work-based” pensions. Most new pension schemes are now “money purchase” also known as “defined contribution” or “DC” schemes. The following information only deals with money purchase scheme. Other schemes are known as defined benefit schemes and are not dealt with here.

What workers are affected?
Entitled Workers

“Entitled workers” is a phrase used for workers who are not eligible for automatic enrolment but can choose to join a pension scheme.

Entitled workers are either:

Aged between 16 and 74; Working or ordinarily work in the UK under their contract; and Have qualifying earnings payable by the employer in the relevant pay reference period but below the earnings trigger for automatic enrolment.

Aged between 16 and 21, or state pension age and 74; Working or ordinarily work in the UK under their contract; and Have qualifying earnings payable by the employer in the relevant pay reference period that are above the earnings trigger for automatic enrolment.

As an “entitled worker” you have the right to opt in to a workplace pension scheme, if you choose.

If an entitled worker chooses to opt in to a workplace pension scheme, they must do so by giving the employer a “joining notice”. The employer must then enrol the entitled worker into a pension scheme. The employer will then need to deduct contributions from the jobholders pay and pay these to the scheme. However, the employer does not have to pay into the scheme themselves, unless they choose to do so, or have chosen a scheme that requires an employer contribution.

The payments into your pension will be made of:

• 
  Your contribution – this will be taken directly from your pay
  
• 
  Employer contribution (if any)
  
• 
  Tax relief
  

Money deducted from pay

If you opt in to a pension scheme, a percentage of your pay will be deducted automatically by your employer every payday. This together with a contribution from the government will be paid into your pension pot. The employer needs to pay the employees contributions to the pension scheme within a specified time limit. Contributions must be paid to your pension pot no later than 22^nd day (19^th if paid by cheque) of the month after the deduction from pay was made.

The money is normally invested within the pension pot by the pension scheme administrators. Sometimes employees have a say into what type of investments the pension pot holds, and sometimes the investments are decided on by the pension scheme administrator.
How much will the contributions be?

The pension scheme selected by the employer may have minimum contribution levels, you should check with your employer to find out if there are any minimum contribution requirements. Although you will probably be able to contribute more than the minimum amount if you chose to do so. The employer can chose whether or not they want to pay contributions themselves into your pension scheme. If you pay Income Tax, the government automatically adds tax relief to your contribution.

Effect on your tax credits, income-related benefits or student loan repayments

Joining a workplace pension scheme means your take-home pay will be reduced which may:

• 
  Mean you’re entitled to tax credits or increase the amount of tax credits you get
  
• 
  Mean you’re entitled to an income-related benefit or increase the amount of benefit you get
  
• 
  Reduce the amount of student loan repayments you need to make.
  

Withdrawing money from the pension pot

You can’t usually take the money out before you are 55 years old unless you are seriously ill. When you start to withdraw money from the pension pot up to 25% of its value at that time can be taken tax free. The remainder will be treated as taxable income when withdrawn from the pension pot.

Managing your pension

Your pension provider will usually send you a statement each year to tell you how much is in your pension pot. You can also ask them for an estimate of how much you’ll get.

You may be able to nominate (choose) someone to get your pension if you die. This can usually be done at any time and the nomination can be changed at any time.

Changing jobs and taking leave

If you change jobs your workplace pension still belongs to you. The money will still be invested and you will be able to withdraw it as explained above.

If you get another job you will be able to join the workplace pension arranged by your new employer. Depending on the schemes rules you may be able to:

• 
  Carry on making contributions to your old pension
  
• 
  Transfer the pension pot built up with the old employer to the new pension scheme
  

During paid leave and unpaid leave the contributions paid by you (and by the employer if any) may continue or may cease depending upon the specific agreement between the worker, employer and pension scheme.

If you want to leave your workplace pension scheme

If you opted to join the pension scheme you are enrolled. You can leave (called opting out) if you wish. We would recommend you obtain independent impartial advice before making the decision.

Further advice

For free impartial information about workplace pension options contact:

The Money Advice Service

https://www.moneyadviceservice.org.uk/en/categories/pensions-and-retirement

The Pensions Advisory Service

http://www.pensionsadvisoryservice.org.uk/

An independent financial adviser would be able to provide impartial advice although you will usually have to pay for this.

http://www.unbiased.co.uk/

If you are concerned about the way your employer is dealing with your automatic enrolment into a workplace pension The Pensions Regulator can investigate these.

http://www.thepensionsregulator.gov.uk/individuals/reporting-a-concern.aspx

Also The Pensions Advisory Service may be able to help with these concerns

http://www.pensionsadvisoryservice.org.uk/contact-us.aspx

The workplace pensions enrolment tool may also be helpful to find out how you should be affected by auto-enrolment

https://www.gov.uk/auto-enrolled-into-workplace-pension

ACCA LEGAL NOTICE

This is a basic guide prepared by the ACCA UK's Technical Advisory Service for members and their clients. It should not be used as a definitive guide, since individual circumstances may vary. Specific advice should be obtained, where necessary.