Auto enrolment / employer pension diescrepancies

BoiledBreadTomatoSauce

Hi all

Just started a new job and was enrolled in the pension scheme, paying 4% each month.

I calculated how much I expected for take-home pay but when my salary came in, it turned out I was about £20 short per month. It appears to be because my pension scheme at work is an employer pension not an auto-enrolment pension, meaning I pay pension on my entire salary, whilst with auto-enrolment I wouldn't pay on the first 6k.

The difference is only £20 a month so no big deal, but every little helps. Why would my employer not do auto-enrolment like most other companies?

cloud_dog

Because they may be offering a better scheme?

msallen

Their scheme was probably in place before auto-enrolment was a thing.

As long as their contribution is based on the whole salary too then it's obviously to your benefit.

BoiledBreadTomatoSauce

It’s a fairly standard scheme - I contribute 4% and they do the same. In terms of how that would be better than auto enrolment obviously it’s a slightly bigger contribution, but as I’m highly unlikely to make it to retirement age I’d probably rather the £20 a month.

cloud_dog

We all see what we want to see.

I assume the company contribution is also based on your entire salary?

BoiledBreadTomatoSauce

Yes it is.

Ganga

So you would rather have £20 more a month less tax to spend now rather than £40 a month going into your pension?

BoiledBreadTomatoSauce

That wasn’t what I said but thanks for the input.

hugheskevi

Why would my employer not do auto-enrolment like most other companies?

Your employer will be operating automatic enrolment. This is process whereby new recruits are automatically placed into a pension scheme meeting a set of conditions.

One of those conditions is a statutory minimum level of contributions, setting out what the member, the employer and the total minimum contributions must be. The employer must pay at least the relevant amount, but is free to pay more if they wish.

So the employer is offering an automatic enrolment scheme with contributions in excess of the statutory minimum.

LHW99

BoiledBreadTomatoSauce wrote: »

It’s a fairly standard scheme - I contribute 4% and they do the same. In terms of how that would be better than auto enrolment obviously it’s a slightly bigger contribution, but as I’m highly unlikely to make it to retirement age I’d probably rather the £20 a month.

If your health is truly that bad, then you may be able to access the whole pension pot before the normal age 55, once you have a diagnosis of less than 12 months (I think)

BoiledBreadTomatoSauce

LHW99 wrote: »

If your health is truly that bad, then you may be able to access the whole pension pot before the normal age 55, once you have a diagnosis of less than 12 months (I think)

We'll see. No males in my family have ever made it to pensionable age but they all smoked, drank and ate far more than me.