18-year-olds to receive Pension Auto Enrolment Benefits. A new government initiative is set to lower the age for Pension Automatic enrolment, to include those over the age of 18, by the year 2020.
By law, UK employers are currently required to enrol all employees earning £10,000 or more and over the age of 22, into a workplace pension scheme. The size of pension contribution is based on the individual’s earnings. Although this is set to raise in the future, the percentage is currently 2% of earnings; 0.8% from employee, 1% from the employer and 0.2% in tax relief from the government.
It is hoped that by reducing the age for Pension Auto Enrolment, young people will be encouraged to save for their future from an early age. The new legislation will affect 900,000 young people.
What are the Criteria for Pension Auto Enrolment?
• Working in the UK
• Do not already have a workplace pension
• Earning more than £10,000
Workers on short-term contracts and agency workers are also eligible for this scheme, provided they meet the other criteria. Those on maternity, adoption and carers leave can also expect to receive the same benefits.
Work & Pensions secretary David Gauke said “There had been greater saving for pensions since Automatic Enrolment came into effect. We want to extend that to young people under 22.”
So far more than 9 million people in the UK have been automatically enrolled into a workplace pension scheme, in addition to the 10.8 million already contributing.
Andrew Colyer-Worsell, Senior Pension adviser from Fix My Pension, said “Anything we can do to help young people get saving for the retirement is a good thing. The sooner they start adding to a pension pot, the greater the rewards for the future are.”