Length of Time Between Starting Job and Contributing to Pension

physicsgirl

I'll soon be starting my first job and looking for advice on what's "normal". I accepted a job at a fairly small company (~20 employees) and I've got my contract through, but under the section on pensions, it states

1. I can only join the employer's pension scheme after 6 months continuous employment
2. The employer may (at its discretion) make financial contributions to the pension scheme after I have been working there for a year

I haven't had a proper job before and so have no idea whether this is reasonable, so I would appreciate any input. I also thought employer contribution was now mandatory for a pension (?) so maybe it's a standard contract and they haven't updated the wording?

PensionTech

Companies of that size are still being signed up to the new auto-enrolment system so it's perfectly possible that your company isn't caught by the new regulations yet. When it is, then yes, they will have to contribute a certain amount (though only 1% at the moment) to your pension - it won't be discretionary and they will have to do it whether or not you have been there for a year. Ask them when their "staging date" is - that's when the new rules will kick in for them.

LittleOne

I had to wait 2 years at my old job! (Very small company, 17 employees)


However, it was straight away in my current job! (Large company, 700+ employees)

kidmugsy

At your age, my wee chickadee, put in enough to harvest the employer's contribution, but probably no more unless they offer "salary sacrifice". Use any spare income to build up an emergency cash fund. Perhaps open a LISA in 17/18.

physicsgirl

PensionTech wrote: »

Companies of that size are still being signed up to the new auto-enrolment system so it's perfectly possible that your company isn't caught by the new regulations yet. When it is, then yes, they will have to contribute a certain amount (though only 1% at the moment) to your pension - it won't be discretionary and they will have to do it whether or not you have been there for a year. Ask them when their "staging date" is - that's when the new rules will kick in for them.

Thanks, that's really useful information and I'll ask about their staging date.

physicsgirl

kidmugsy wrote: »

At your age, my wee chickadee, put in enough to harvest the employer's contribution, but probably no more unless they offer "salary sacrifice". Use any spare income to build up an emergency cash fund. Perhaps open a LISA in 17/18.

Haha, the worst thing is I don't even feel like I am a "wee chickadee" anymore, having done a PhD after university, so the pressure of my "advancing years" is making the pension question even more pertinent! But I'll almost definitely be converting my H2B ISA to a LISA next year and maxing contributions to that, although it might all be gobbled by buying a house... Either way I'll make sure I save as much of my income as possible.

Reue

Both of the large companies I've worked for only offered membership to their pension schemes after 12 months employment. I'd guess this will change with the auto-enrolment rules though?

greenglide

Auto-enrollment has a period of several months (six months?) before they "have" to enrollment you. While many large organisations may allow people to join their schemes immediately (and more so in these days of DC schemes) there is a certain logic in waiting for a "probatiary" period (whether formal or not) to be completed - having £50 stranded in a scheme like NEST isn't going to help anybody.