Auto-enrolment

Auto-enrolment

Didn't find your answer?

To be honest I've not been looking into it much yet, as it won't apply to me for a while. Interested in hearing people's views about it. Would you opt out or stay in? Pro's and cons?

Replies (12)

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By 3569787
03rd May 2016 16:54

Opt out

.

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By Kirkers
03rd Oct 2013 09:14

That was my initial thought too, but I don't want to be too hasty. Why do you say opt out?

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Tom McClelland
By TomMcClelland
03rd Oct 2013 09:32

How exactly, will you opt out? (unless you speak as an employee)

Opting out isn't a choice an employer can make. It is a choice that each employee makes individually. No employee can be placed under any pressure to opt out, and the default action must be to be included in Auto Enrolment.

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By Kirkers
03rd Oct 2013 09:48

Hi Tom, yes I'm an employee.

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By Democratus
03rd Oct 2013 10:27

Why Opt Out 3569787?

If you have no other pension scheme you are throwing away a significant tax free contribution from the employer. The scheme offered may not be "the best" for each individual employee, but as an alternative to none I can't see why you would say "without a doubt".

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By Kirkers
03rd Oct 2013 10:48

Anyone got any pros and cons for it?

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By pauljohnston
04th Oct 2013 13:41

Pros and Cons

For Employers

Pros

May help staff retention

Tax Deductable

Cons

Costs Money

Even more red tape

Hassle from Staff once reduction in wages noticed

May mean that staff salary increases are reduced (to pay for Pen Contrib)

For Employees

Employer Contribution

Someone else doing paperwork etc to set it up

Cons

Reduction in salary

Paperwork each time my employer changes

 

The Chilean idea with a central fund would have been a much easier option.

 

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By Marlinman
04th Oct 2013 13:54

Why opt out

The vast majority of employees should opt out and pensions are really only worth it for higher rate tax payers who have more money than they know what to do with.  To get a decent retirement income, you need a fund of at least half a million, which most people haven't a hope of achieving. Poor growth, high charges and falling annuity rates, together with uncertainty as politicians continually mess with pensions and move the goalposts. Gordon Brown destroyed pension funds when he abolished ACT, despite being advised not to.  Now, 17 years later, nothing has been done to reverse this damage.  Best to enjoy your money and live life to the full while you have it.        

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By john cottam
07th Oct 2013 09:34

Stay In

Pensions are a very tax -efficient way of saving, also the employer contribution is effectively a pay increase, why would you opt out of that? The fact that you cannot access the increase until you reach the age of 55 doesn't change that. From a wider social perspective everyone should make some provision for their retirement otherwise the cost falls on the taxpayer.

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By Knight Rider
07th Oct 2013 10:16

Extra Tax

How will it help employee retention if all employers have to offer it?

It amounts to an extra tax on the low paid for those that do not opt out. The Government is mis-selling auto enrolment to the low paid. Those with small pensions will have them means tested on retirement.

More worryingly now that savings are becoming compulsory why bother to offer tax relief at all?

 

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By Marlinman
07th Oct 2013 11:32

Opting Out

iI agree with you there Knight Rider.  The cure to the problem is to treat the cause i.e. allowing pension funds to claim back tax credits on dividends. This would enhance the growth of funds and make them more attractive so that employees wouldn't want to opt out.  Instead they try to screw more money out of people which they don't have. What good is paying into a pension if you don't have enough money for food, running a car or paying the rent/mortgage.

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By DMGbus
07th Oct 2013 11:36

For the benefit of who?

I sometimes get the (maybe incorrect) impression that some recent years' Government mandated schemes are devised to benefit certain industries...

iXBRL = Software industry (commercial software suppliers and HMRC's pet IT consultants)

RTI = Software industry (commercial software suppliers and HMRC's pet IT consultants)

Auto Enrolment = Financial Services Industry

I can't help thinking about all of the money going from employers, other businesses and employees being diverted into the pockets of the various unworthy benefactors.

Personally I would like to see a halt to all employer funded pension schemes (or discourage them by treating employer contributions as a benefit in kind and additionally  denying tax relief for employer contributions) to be replaced by a fair same for everyone pension scheme (an adequate  state scheme funded by NICs for everyone) - this would clearly not suit the Financial Services Industry though so must never be allowed to come to fruition by vested interests and strong political influence.  We currently have a two-tier society for pensions, those who have generous employer schemes (mainly public sector) and those who do not.   We do not need an added tier of costs and bureaucracy as in AutoEnrolment.  For AutoEnrolment to be fair it should replace all existing defined contribution schemes.

 

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