Teenagers to be auto-enrolled in workplace pension schemes

The government has reviewed workplace pensions and announced that it wants to lower the age at which employees are auto-enrolled in workplace pension schemes from the present 22 to 18.

The Department of Work and Pensions estimate that this will add 900,000 new pension savers, who will contribute a total of £800m to their pension fund.

David Gauke, Secretary of State for Work and Pensions, said:

“For an entire generation of people, workplace pension saving is the new normal and my mission now is to make sure the next generation of younger workers have the same opportunities.”

Young workers need to earn at least £10,000 to be auto-enrolled in a workplace pensions scheme.

The government has also made changes to the banding rules where pension contributions were based only on a portion of a salary. By calculating contributions from the first pound earned, workers on the average salary of £27,000 will contribute an extra £235 a year.

Some pension experts thought that the government would introduce auto-enrolment for the self-employed, but the review has made no changes for this group. Enrolling in a pension scheme remains voluntary for self-employed workers.

Many retirement planning advisors recommend starting to save for a pension as soon as possible, so the lowering of the age to 18 should be welcome. It is also advisable to contribute more than the minimum amount to pensions savings to have a financially comfortable retirement.

To explore all pension options, seek professional pensions advice.

A PENSION IS A LONG TERM INVESTMENT. THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN. YOUR EVENTUAL INCOME MAY DEPEND UPON THE SIZE OF THE FUND AT RETIREMENT, FUTURE INTERESTS AND TAX LEGISLATION.

AUTO ENROLMENT ADVICE IS NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY

Source used: http://www.telegraph.co.uk/pensions-retirement/news/teenagers-automatically-added-company-pensions-first-time/