The new workplace pensions

Jet

I understand new workplace pensions are having to be set up by all employer's.

I am a little confused as to how it all works for part time / low paid staff.

I have read about "qualifying earnings" being between £5668 and £41,450 but I have also read that you won't be put into the scheme unless you earn £9440 or whatever the tax allowance will be at that date.

Currently I work for a small employer who won't offer a pension until they "have to" and I earn just under the tax allowance, however, I also have part time self employment of around £5000 net profit per year and some rental income also. So therefore, I do pay income tax.

So, will I be given the option to actually have a workplace pension as I'm not sure if I earn enough?

If I will qualify, will the tax relief work through my tax return as I don't earn enough in my employment to pay tax?

FatherAbraham

Jet wrote: »

I have read about "qualifying earnings" being between £5668 and £41,450 but I have also read that you won't be put into the scheme unless you earn £9440 or whatever the tax allowance will be at that date.

Currently I work for a small employer who won't offer a pension until they "have to" and I earn just under the tax allowance, however, I also have part time self employment of around £5000 net profit per year and some rental income also. So therefore, I do pay income tax.

So, will I be given the option to actually have a workplace pension as I'm not sure if I earn enough?

People who earn enough (£9440) and are the right age (between 22 and state retirement age) must be auto-enrolled (and then they can opt out if they want). If they opt out, they keep getting auto-enrolled every three years.

People who earn less, and therefore aren't auto-enrolled can still opt in, once the workplace scheme is established. You just have to remember to do it!

Jet wrote: »

If I will qualify, will the tax relief work through my tax return as I don't earn enough in my employment to pay tax?

It depends how the pension scheme works. If it's a money purchase scheme with relief at source, then every pound you pay in from your net pay will turn into a fund contribution of £1.25 (even though you never paid income tax on it).

If it's a scheme which takes contributions from employees' wages before income tax is calculated, then it won't be giving you any tax relief at source, and you'll have to write a letter to the HMRC office which deals with your tax affairs to ask for the tax relief (once the tax year is finished). If you fail to claim within four years or so, you'll lose the relief, so be sure to make a note in your diary!

Warmest regards,
FA