Auto enrolment: Top employee questions answered

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For immediate release: Tuesday 14 June 2016

New data released today from The Pensions Regulator, reveals nearly 6.3 million workers have now begun saving as a result of auto enrolment and nearly 143,000 employers have complied with the legislation.

But, over 1.7 million smaller employers are yet to reach their staging date employing around 3.7 million people.

Morten Nilsson, CEO of NOW: Pensions said: “Millions of people are now saving as a result of auto enrolment but based on the calls we receive and the mail in our postbag, there’s still a fair amount of confusion amongst employees about what it all means particularly around some of the regulatory quirks.”

Top five most frequently asked employee questions around auto enrolment:

  1. I want to opt out, why can’t I do this before I’m enrolled?

The legislation prevents anyone from opting out until after they have been auto enrolled and have been given their enrolment letter. If you then opt out within the opt out window of a month you will get a full refund of contributions directly from your employer, after this there is no guaranteed refund of contributions.

  1. Will I be re-enrolled every 3 years?

Yes. Under auto enrolment legislation, every three years employers must re-enrol eligible jobholders who have opted out, ceased active membership of their pension scheme or reduced their pension contributions below the minimum level.

  1. How much auto enrolment minimum contributions and when will they increase?

Last year, the Chancellor George Osborne announced delays to minimum contribution rate rises for auto enrolment. Under previous plans, minimum contributions would have risen from 2% of qualifying earnings to 5% from October 2017 and to 8% from October 2018. Now the rise to 5% will take effect from April 2018 and to 8% from April 2019 (subject to Parliament approval).

Date Employer minimum contribution Total minimum contribution
Before April 5 2018 1% 2% (including 1% staff contribution)
April 6 2018 – April 5 2019 2% 5% (including 3% staff contribution)
April 6 2019 onwards 3% 8% (including 5% staff contribution)
  1. Are auto enrolment contributions sufficient?

In general, individuals will need to contribute more than the minimum level at which they are likely to be automatically enrolled, in order to have a good chance of achieving an adequate retirement income. It’s also important to remember that auto enrolment minimum contributions are based on a band of earnings, which means that for the 2016/17 tax year the first £5,824 of an employee’s earnings does not count for the purposes of auto enrolment and anything above £43,000 isn’t included either. This has a highly corrosive effect on savers’ pension pots and means that 8% is never actually 8%, as contributions aren’t based on every pound of earnings.

  1. What happens to my money when I change jobs?

One of the side effects of auto enrolment will be the proliferation of small pension pots. At the moment, unless you decide to transfer your money, it will remain invested with your existing provider.


For further information:
Amy Mankelow
NOW: Pensions
Tel: 0203 640 9075

NOW: Pensions @nowpensions
NOW: Pensions is an independent, multi-employer trust serving thousands of employers and hundreds of thousands of employees from a wide range of sectors.

A subsidiary of one of Europe’s largest pension funds, Danish pension scheme ATP, NOW: Pensions offers a simple and cost effective workplace pension solution direct to employers and via advisers and the payroll sector.

In April 2013, NOW: Pensions became the first master trust to attain the NAPF’s new PQM Ready Standard. The benchmark shows employers that NOW: Pensions is a well governed pension scheme with low charges and good member communications.

In January 2015, NOW: Pensions achieved independent assurance of scheme quality in accordance with the new master trust assurance framework (AAF02/07) introduced by The Pensions Regulator (TPR) in conjunction with the Institute of Chartered Accountants in England and Wales (ICAEW).

The NOW: Pension Trustee Directors, whose role is to safeguard the interests of members, comprises well-known industry figures with different areas of expertise:

  • Jocelyn Blackwell, founding partner Dunnett Shaw
  • Christopher Daykin, former Government Actuary
  • John Monks, member of House of Lords and former General Secretary of ETUC and TUC
  • Win Robbins, former Head of European Fixed Income at Barclays Global Investors
  • Nigel Waterson, former Shadow Pensions Minister

Employee charges are just £1.50 per month administration charge (reduced administration charge of £0.30 – £1.00 to be applied during auto enrolment phasing for lower earners) plus a 0.3% annual product investment management charge, with no hidden charges.

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NOW: Pensions has a good technical infrastructure combined with a pension product suitable for our team. We couldn’t be happier with NOW: Pensions.
Martin Woods,