This article has been supplied by the Department of Work & Pensions on the subject of workplace pensions – everyone should take 10 minutes to read through this – Scott.

1.  What’s the point of automatic enrolment into a workplace pension?

People are living longer.  You could be retired for twenty years or more and you need to think about how you’ll fund it.  Automatic enrolment into a workplace pension initiates a saving process for people, with the least hassle possible.

Millions of people are not saving enough to have the income they’re likely to want in retirement.  So the government has introduced a new law, which is designed to help workers save more for their later life and have another source of income on top of the State Pension.

By saving into a pension, over *95% of people are better off in retirement than if they had saved nothing.

Unlike other ways of saving, being in a workplace pension means you’re not the only one putting money in.  Your employer has to contribute too provided you earn more than a certain amount a year (£8,105 annually in 2012-13).  Most people will also get a contribution from the government in the form of tax relief.  This means that some of your money that would have gone to the government as tax, goes into your pension instead.

Put simply, as it’s not just you contributing to your workplace pension your money can build up more quickly than if you were saving for retirement on your own!

2.  When will automatic enrolment into a workplace pension affect me?

Changes in the law come into effect starting from October 2012.  From this time and onwards, every employer has to automatically enrol all workers who meet the criteria below into a workplace pension.

The largest employers (120,000 or more staff) will enrol their workers first, followed by other employers phased over several years.  This website provides more details about staging dates www.thepensionsregulator.gov.uk/staging.

The criteria for eligible workers are:

• those not already in a qualifying workplace pension scheme
• those aged 22 or over
• those under State Pension age
• those who earn more than a minimum amount a year (£8,105 in 2012-13)
• those who work or usually work in the UK.

Employers will give their workers the exact date nearer the time that the changes will be made.

3.  Why should I bother with a workplace pension?

People are living longer.  You could be retired for twenty years or more and you need to think about how you’ll fund it – you’ll want to make sure you can live it well.

Plus, it’s not only you who’s contributing to a workplace pension.  So does your employer and the government too, in the form of tax relief.  So why miss out on additional contributions from them, which will make your pension pot grow much faster!

Automatic enrolment into a workplace pension is a hassle free way of saving while you earn.

It’s useful to start thinking about your spending habits and the things you will regularly need money for such as paying bills, transport and buying food.  Just as you do now, you’ll also want to give yourself a good lifestyle in later life which may involve running a car, meeting friends for social events and occasions, buying gifts for loved ones, leisure time, hobbies and holidays.

The ‘Your future wallet’ tool on Directgov may be able to help you with this.  It helps you work out how much money you may need in later life and lets you compare this to your present situation.

4.  Am I too old to start a pension?

Being in a workplace pension is worth considering, even if you think you’re too old.  Unless your retirement is just a few weeks away, there’s still time to build up some money.

Unlike other ways of saving, being in a workplace pension means you’re not the only one putting money in.  Your employer has to contribute too provided you earn more than a certain amount a year (£8,105 annually in 2012-13).  Most people will also get a contribution from the government in the form of tax relief.  This means that some of your money that would have gone to the government as tax, goes into your pension instead.

5.  Am I too young to start a pension?  Retirement seems ages away

Being in a workplace pension is worth considering, even if you think you’re too young.  Just a small amount saved regularly has plenty of time to grow.  And the sooner you start saving, the more you’ll get.

Remember that any money you put into a pension scheme is not ‘lost’ income.  It’s simply stored away and saved for your retirement, when you’re likely to value it more.  DWP analysis has found that over *95% of people can expect to be better off in retirement having saved than if they had not.

And unlike other ways of saving, being in a workplace pension means you’re not the only one putting money in.  Your employer has to contribute too provided you earn more than a certain amount a year (£8,105 annually in 2012-13).  Most people will also get a contribution from the government in the form of tax relief.  This means that some of your money that would have gone to the government as tax, goes into your pension instead.

Put simply, as it’s not just you contributing to your workplace pension your money can build up more quickly than if you were saving for retirement on your own!

6.  How much will I get from my workplace pension when I retire?

It’s possible to get an idea of how much you will get from your workplace pension by getting a ‘pension estimate’ (sometimes called a ‘pension projection’).  You can get this from whoever runs your pension scheme.

They may also have an online calculator that can help you work out the income you may get when you retire.  Alternatively, this calculator from the Money Advice Service may be of use.

Your life may change a lot when you retire.  This means your household finances may be very different, too.  Once you have an estimate of how much you can expect to get from your workplace pension you can think about whether it will be enough.  The ‘Your future wallet’ tool on Directgov may be able to help you with this.  It helps you work out how much money you may need in later life and lets you compare this to your present situation.

7.  Will I be forced to save into a workplace pension?

No.  Workers can opt out if they don’t feel a workplace pension is right for them.  But if they stay in they will benefit from additional contributions.  Unlike other ways of saving, being in a workplace pension means you’re not the only one putting money in.  Your employer has to contribute too provided you earn more than a certain amount a year (£8,105 annually in 2012-13).  Most people will also get a contribution from the government in the form of tax relief.  This means that some of your money that would have gone to the government as tax, goes into your pension instead.

Put simply, as it’s not just you contributing to your workplace pension your money can build up more quickly than if you were saving for retirement on your own!

To try and encourage people to save for their retirement, employers must automatically enrol eligible workers back into their scheme at regular intervals.  This is usually every three years.  This is because your circumstances may have changed and the time may now be right for you to start saving.  Your employer will contact you and you can choose to stay in the workplace pension or opt out.

8.  What happens to my workplace pension if I move jobs?

Your workplace pension belongs to you, even if you leave your employer in the future.  Nowadays lots of people move jobs several times in their working lives, which could mean you have a number of different workplace pensions by the time you retire.

It’s also possible to have both a workplace pension and your own personal pension, so you could choose to continue paying into both.

9.  Should I open a workplace pension if I’m already paying into a personal pension?

It’s possible to have both a workplace pension and your own personal pension, so you could choose to continue paying into both.  Or you might choose to continue with just one of them.  It depends on your circumstances, like what you can afford and what your personal and workplace pension schemes are offering.  For example, with a workplace pension you will receive a contribution from your employer that you won’t get with your own personal pension.

10.  I’m on a low income and can’t really afford to pay into a pension

Being in a workplace pension is still worth considering, even if you think you’re too young or on a low income.  Just a small amount saved regularly has plenty of time to grow.  And the sooner you start saving, the more you’ll get at the end.

Remember that any money you put into a pension scheme is not ‘lost’ income.  It’s simply stored away and saved for your retirement, when you’re likely to value it more.  DWP analysis has found that over *95% of people can expect to be better off in retirement having saved than if they had not.

And unlike other ways of saving, being in a workplace pension means you’re not the only one putting money in.  Your employer has to contribute too provided you earn more than a certain amount a year (£8,105 annually in 2012-13).  Most people will also get a contribution from the government in the form of tax relief.  This means that some of your money that would have gone to the government as tax, goes into your pension instead.

Put simply, as it’s not just you contributing to your workplace pension your money can build up more quickly than if you were saving for retirement on your own!