New workplace pension laws What you need to know

New workplace pension laws What you need to know by Michael Cheary It’s no secret that workplace pensions are one of the best ways to save for the future.In order that no employee misses out, a new pension auto-enrolment system was introduced in 2012 to provide employees with an easy, hassle-free way to save into work ­place pensions, and to ensure that employers contribute too.If you are eligible and aren’t already paying into your company’s pension plan, your employer must automatically enrol you into a scheme.Not sure how you’ll be affected? We spoke to Legal General’s Peter Elliott, who explains the key things you need to know about auto-enrolment:EligibilityIf you’re aged between 22 and the state pension age, work in the UK, don’t belong to a pension scheme already and earn more than £10,000 a year then you are eligible for auto-enrolment.By now many people will already be signed up to their employer’s scheme, but if your company only employs a small number of people you might be among those yet to be enrolled. Companies of all sizes must have enrolled their employees into schemes by 2018. There is more information on enrolment on the GOV.UK website. You can opt out of the scheme if you want to, but remember that if you do this you won’t benefit from your employer’s contributions.How auto-enrolment worksOnce in the scheme, you make regular contributions from your salary and your employer pays in too.  This will contribute to your personal pension pot to provide for your retirement.You’ll also get tax relief on your contributions, which makes your money go a little further.By 2018, assuming you don’t opt-out, it’ll be compulsory for an amount equal to at least 8 per cent of your qualifying earnings to be put into your pension. Your qualifying earnings is the amount you earn before tax up to a current maximum limit of £42,385 per year and less the lower earnings threshold of £5824; limits change at the start of every tax year. At least 3 per cent of this must be paid by your employer.Remember, you can always choose to pay more than the minimum and your employer may also offer more generous contributions as part of their benefits package.Moving jobsIf you’re changing jobs, don’t worry, your previous pension won’t suddenly disappear. You may be able to combine your old pension with your new one.However there may be fees involved in a transfer so it’s worth asking for independent financial advice before going ahead.Tracking your pensionThe pension company will provide you with a personal statement once a year showing how your pot is progressing, and will usually provide a secure online account management facility so you can monitor it 24/7.If you think you may have a pension with a previous employer, contact the Pension Tracing Service and they’ll try and find it for you.For more information, download Legal General’s free eBook, Rough Guide to Work and Money at www.roughguidefinance.com to find out more useful tips on how to minimise y our workplace costs and make the most of your benefits.  For more news from Legal General, follow them on Twitter  @landg_uk