Pensions, Starting Out

Can you afford to wait six years before your employer’s pension scheme is introduced?

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payday loans ukThis is hard to believe if you are one of the unfortunate workers who have no?pension to speak off. Many bosses will be aware of the new requirements to?provide for their workers retirement but they do not have to pay full whack?in to these new auto-enrolment schemes until 2018. The implementation date for your employer scheme largely depends on the number of employees, with?smaller employers meeting the changes last.

Once the schemes are introduced you will be entitled to a contribution from your?employer of 3% qualifying earnings. You will be opted-in to the scheme and will?be required to contribute 5% (of which 1% is paid for by the government).

It is not surprising that employers are comfortable with the delay given the?current economic climate. Jobs are difficult enough to secure without worrying?whether your boss is prepared to go one step further and offer a decent pension.

The need to provide for retirement however does not go away despite?the current fiscal situation. Your employer need not and will not accept?responsibility for your finances in retirement. He is after all only contractually?obliged to contribute when auto-enrolment rules come in to place.

The sooner you accept that you have to take responsibility for your own pension?saving, the more options you will have in later life. Can you really afford to wait?six years for your employer to take action on your pension?

  • Start contributions now to a good low cost pension plan. Your payments?benefit by an additional 20% gift paid for by the government.
  • Commit to a regular amount monthly to ensure your savings stay on track?and increase contributions annually.
  • Whenever finances improve or your employer rewards you with a bonus?use some of this to make further pension contributions.
  • If you think you might want access to some of your savings then consider?ISA for some of your retirement pot. Any ISA savings can always be?transferred to pension at a later date with the additional tax boost by the?government.
  • Keep abreast of your employer’s plans for implementing the company’s?auto-enrolment scheme so that you benefit by their contribution to your?pension.