Managing my money
Managing my money

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Managing my money

7.1.5 Workplace pensions

A major development in pensions occurred in 2012 with the commencement of the government’s ‘automatic enrolment’ scheme for pensions. From October 2012 employers started being required both to offer a workplace pension scheme to their employees and to automatically enrol them onto the scheme.

Workplace pensions can take various forms, such as the defined benefit and defined contribution occupational schemes you looked at earlier. They can also be in the form of personal pension plans, which you’ll look at later this week.

Large employers were the first to undertake this new approach to pension planning in the workplace. By 2018 all employers will have to be automatically enrolling their eligible employees into a workplace pension scheme.

If employees do not want to be enrolled in the pension scheme offered by their employers they have to take action to opt out. So the prospect is that, for many, inertia will result in them becoming, and remaining, enrolled in a workplace pension scheme.

Automatic enrolment is an important initiative to get people to contribute to a pension plan, although some criticisms have been voiced about the scale of the fees levied on those enrolled onto schemes.

Figure 4

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