Pension auto enrolment


Information and FAQs

Auto enrolment is designed so that eligible workers who want to build up savings for retirement can do so without having to take any action themselves. 

The Government requires that employers help their employees to save for retirement by enrolling them in a pension scheme if they: 

  • earn at least the minimum amount set by the Government each year  

  • are aged between 22 and the age they are due to receive their State pension 

  • work in the UK 

In workplace pension schemes you will pay a contribution to your pension. This will be deducted from your monthly salary and the amount you pay reduces the amount of tax you pay. 

As well as your contribution from your salary, Royal Holloway also pays a contribution to your pension. The percentage contribution varies depending which scheme you are in but, on average, the College pays 2/3rds of the total contribution each month. 

RHUL also operates a salary sacrifice scheme for pension contributions. Salary sacrifice means that you exchange the amount of your monthly pension contributions for a lower salary instead. The same amount is still paid to the pension scheme, but this means you pay lower National Insurance contributions. 

So, for example, if you pay tax at 20% and are in the SAUL, then a total contribution to your pension of £146.67 would cost you only £83.33. This is due to tax, National Insurance relief, and the College’s contribution, as shown below. 

 Employer contribution 316.67

 Employee contribution 

 100*     *Total contribution: £416.67

 Tax relief 

 20 

 NI saving 

13.25

Net cost 

83.33

 

Types of pension scheme

There are two main types of workplace pension.  

The first is called Defined Benefit. This type of pension allows you to build up a retirement income that is based on your salary when you leave the scheme and the length of time you pay in for. The pension you receive is based on a formula using both salary and length or service and this means that the pension you will receive can be predicted. Your pension is then usually increased by an inflation amount each year and is guaranteed to be paid until your death. 

This type of scheme allows you to better plan for your retirement as you know how much you’ll have, but it doesn’t always give much flexibility in the way the pension is paid. You must take a pension income from this type of pension.  You may be able to exchange some of it for cash but there are limits to how much you can exchange, and you can only do this at retirement. The pension scheme we operate for our support staff, SAUL, is an example of a Defined Benefit pension scheme. 

The second type of pension is called Defined Contribution. In this type of scheme, you have an individual savings pot which contains your contributions along with those from the College. At retirement you draw your savings from this pot, which contains the contributions paid in along with any investment returns that have been earned by the scheme investing in stocks and shares. 

With this type of scheme, you have more options around how you draw from it when you decide to retire.  You can either draw the whole sum out as cash, or draw some cash and leave some invested.  Or you can choose to buy a guaranteed income (also known as an annuity). 

The pension scheme we operate for our academic and comparable posts, USS, is a hybrid scheme that has some Defined Benefit and some Defined Contribution. 

Saving for retirement

The earlier you start to save for retirement the more you could have in retirement. As a general guide it’s suggested that whatever age you are, you save half this amount as a percentage of your pay. So, if you start pension saving at 30, saving 15% of your pay into your pension should be enough to give you a good level of retirement savings. The 15% would be made up of contributions from you and from the College. This post from Money Saving Expert  Pensions: Everything you need to know for retirement - MSE (moneysavingexpert.com) explains how this works and gives more reasons why you should save for your retirement. 

Depending on what age you are when you enter full-time employment your working life could be anywhere from forty to fifty years. Today, the average life expectancy for men is 85 and 88 for women. However, there is a 1 in 4 chance of living to 95. This means that your retirement income may need to last you at least 20 years and possibly more. 

In addition to your workplace pension, if you have at least ten qualifying years on your National Insurance record you’ll be entitled to receive a state pensionState Pension. To count as a qualifying year you need to earn at least £6,240. To receive the maximum level of state pension you must have at least 35 qualifying years. If you have less than this you will receive a proportion of the full entitlement. 

It’s really important to start planning for your retirement as early as you can.  

For further information you can visit the Government Workplace Pension website.  

 

Frequently asked questions

 

What is auto enrolment?

 Legislation relating to workplace pensions requires that all employers automatically enrol specific groups of their workers into a pension scheme. For the Royal Holloway University (RHUL), the date from which we were required to implement auto enrolment was 1 August 2013. 

What does this mean for you?

If you are already a member of one of the College’s pension schemes there is no change for you as a result of auto enrolment. 

Royal Holloway pension schemes include Universities Superannuation Scheme (USS), and The Superannuation Arrangements of the University Of London (SAUL).  

If you do not pay into a pension scheme Royal Holloway is required, by law, to automatically enrol you into a workplace pension if you are aged between 22 and State Pension Age (currently 66) and have earnings above the statutory minimum amount of £833 per month. If you are not automatically enrolled you will have the opportunity to join a scheme if you wish. 

If you are auto enrolled, you may opt out of the scheme in question, but every three years employers are required to re-enrol all eligible workers who, at that time, are not members of a qualifying scheme. 

Is everyone being auto enrolled into a workplace pension?

No. This depends on whether you meet certain criteria.  You will be auto enrolled into a workplace pension if you: 

  • are not already in a workplace scheme; 

  • are aged 22 or over; 

  • are under State Pension age (currently 66); 

  • earn more than the statutory minimum amount of £833 per month and   

  • work or usually work in the UK. 

If I'm working out of the UK or I've been seconded to the UK from overseas, does auto enrolment apply to me?

If you're working out of the UK but are being paid by the College, then auto enrolment does apply to you as you normally work in the UK. 

If you're on secondment to the College from overseas and you're being paid by your overseas employer, then auto enrolment does not apply to you as you don't normally work in the UK. 

If I meet the criteria, when will I be auto enrolled?

If you meet the criteria you will be auto enrolled into a workplace pension scheme. We will e-mail or write to you with full details. 

Employers are permitted by the legislation to postpone the automatic enrolment date for up to 3 months. This allows for "spikes" in earnings for workers with variable earnings. We will let you know if this applies to you. You will however have the right to join a workplace pension scheme during the period of postponement if you want. 

If I’m not auto enrolled can I join a pension scheme?

If you don’t meet the criteria for auto enrolment you can join a workplace pension scheme if you want. The pension scheme that you can choose to join will depend on which category of worker you are.  

To join, contact the Pensions Team in writing by sending a letter which has to be signed by you. Or you can e-mail pensionqueries@rhul.ac.uk and you must include the wording "I confirm I am personally submitting this notice to join a workplace pension scheme". 

Which pension scheme will I be auto enrolled into?

That depends on which category of worker you are. The table below shows which pension scheme the various categories of staff will be auto enrolled into, or can choose to join if you don’t meet the criteria for auto enrolment. 

SAUL Pension Grades 1 – 5 

USS  Pension Grades 6 - 10 

Details of the benefits by each schemes are located at the following websites 

How do I opt out of the pension scheme?

If you wish to opt out of the pension scheme you can download a scheme opt out notice from www.uss.co.ukhttps://www.saul.org.uk which you can complete and return to the Pensions Team.  

If I opt out, can I re-join at a later date?

Yes, you can re-join the relevant workplace pension scheme at any time, in writing by sending a letter which has to be signed by you. Or you can e-mail  pensionqueries@rhul.ac.uk and you must include the wording "I confirm I am personally submitting this notice to join a workplace pension scheme". 

I am paying into a personal pension already, can I continue with this?

It is possible to have both a workplace pension and your own personal pension, so you could choose to continue paying into both. 

Am I not too young to start thinking about pensions?

No. It may seem early to start planning for later life, but remember you could have many years of retirement and you will need an income. A workplace pension is one way to provide that income. Usually the longer you pay into a pension scheme the better the benefits will be.