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What is auto-enrolment?

Auto-enrolment is a government initiative designed to help people build up their retirement savings through a workplace pension. If you are eligible, your employer will make regular payments into your pension pot. Depending on your plan rules, monthly contributions may also be taken from your salary automatically. These will be deducted before you receive your pay each month.

The benefits of auto-enrolment

Easy access to a pension

A big advantage of auto-enrolment, as its name suggests, is that you join your pension scheme automatically and your monies will automatically be invested in a default investment strategy. So, you don’t have to do anything yourself to join the plan. Once you have joined, you should review your contribution levels, investment options and target retirement age that you have been auto-enrolled at, to ensure they meet your requirements and meet your retirement plans. You may opt out of the plan, although this may mean you lose valuable benefits from your employer, so you should contact your employer before deciding to do this.

It also makes saving easier as money is paid into your pension from your employer and the government.

You need to remember, currently you can’t usually access the money in your pension until you are 55, at the earliest.

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Explaining contributions

When you're auto-enrolled, your employer is required to pay contributions into your pension pot. There is a minimum level they must meet, but some employers choose to add more.

Depending on your plan rules, you may also have to contribute some money from your salary each month, or you may have the option to do so. Your contributions to a pension plan receive tax relief, a top up from the government. If your contributions are taken from your salary before you are taxed you'll receive the tax relief immediately, under other contributing arrangements we will claim basic tax relief at 20% from the government and apply this to your account. If you're unsure what level of contributions you or your employer pays, you can check your 'Contributions explained' document in PlanViewer or ask your HR department. Find out more about contributions.

Five common questions about auto-enrolment

1. How do I know if I’ve been auto-enrolled?
2. Do I have to be auto-enrolled?
3. What happens if I earn less than £10,000?
4. What happens if I’m 21 or younger?
5. What happens if I want to opt out of, or stop contributing to, my pension plan?

Check the contributions in your pension by logging in to PlanViewer today.