What Is Auto Enrolment?
Please note this blog post was published over 12 months ago and so may not include the most up-to-date information, for example where regulation around investing has changed.
Your Auto Enrolment Workplace Pension offers an opportunity to build a fund for a comfortable retirement.
All employers are required by law to offer an Auto Enrolment Pension scheme, and you’ll be automatically entered into this if you are employed in the UK and earn over £10,000 a year and are aged between 22 and the State Pension age. Outside of these criteria, you can join the Pension by opting in.
The scheme works by taking a percentage of your salary each month and putting it into a fund for your retirement. The default for this is 1% of your salary, and your employer will also contribute 1%, you’ll additionally benefit from tax relief. These minimums are set to rise in April 2018 and April 2019.
This could be an effective way for you to prepare for the future. The younger you are when you begin this process, the better, as it gives you more time to invest into your retirement fund.
Our Tackling the Savings Gap research has indicated that you may need £23,000 a year to live comfortably in retirement. However, based on actual savings behaviour, our research found that most people will only receive an income of £6,000 per year from their retirement fund.
Your Auto Enrolment Pension could help you get to a sum that is more suitable for your lifestyle. Goal setting is the start of this process. How much money do you want in retirement, and how long is it going to take for you to get to that figure? Using True Potential Investor, you can set these goals. You can then track the performance of your money, and use our impulseSave® technology to top up your investment if you are falling behind your target.
Something else to think about is changing variables in your Pension such as your contribution percentage, and the risk profile you are comfortable with. This could be an effective way of reaching your retirement goal in a time period which suits you.
By putting away a percentage of your money today, you are one step closer to living more comfortably in the future.