Meet Workie

Do you know about workplace pensions? Have you heard of auto-enrolment?

Whether you’re an employer or employee, you need to know about auto-enrolment. In a bid to raise awareness the Department for Work and Pensions (DWP) has created Workie, the “physical embodiment of the workplace pension” according to Ros Altmann, the pensions minister.

With a campaign budget of £8.5 million, Workie’s task is to get the auto-enrolment message to as many people as possible. So far, only one advert has aired so it remains to be seen how the campaign will develop, but presumably it will explain the features of the policy and why employers cannot opt-out.

Workie may not have been met with universal acclaim, but if the insurance meerkats have taught us anything it’s that a mascot can have a big impact, especially when coupled with consistency. The DWP is trying to reach an audience that, traditionally, can be disengaged from or confused by pensions. With the scope of auto-enrolment meaning that many of these people are likely to be affected, a brave approach may well be needed.

Whether history views Workie alongside the meerkats or the pensions sheepdog is something only time will tell.

What you need to know

For employers a key point is they cannot avoid auto-enrolment and will face a fine for doing so. This is true whether they employ a thousand people or a single individual – so nannies will also be covered.

For employees, it is important to know what they can expect and what it means for them. The enrolment criteria is:

  • Be aged between 22 and state pension age
  • Earn at least £10,000 a year
  • Work in the UK

Crucially, it does not matter what type of job a person has, if you are employed and meet the above criteria, you should have a workplace pension.

Auto-enrolment began its roll-out in 2012 and is scheduled to finish in 2018, but it’s already had an impact.

There’s free money on offer

The policy began to try and help people be financially secure in retirement by having sufficient pension savings. What sets pensions apart from savings accounts and ISAs is tax relief on contributions, and the workplace pensions that employees are being automatically enrolled into will also have employer contributions. This means each time you pay in, the government and your employer also pay in, boosting the size of your fund. It works like this:

  • You pay in £80
  • The government pays £20 (basic-rate income tax at 20%)
  • Your employer pays in £100 (matching your gross contribution)

Higher- and additional-rate taxpayers can claim their extra tax relief from HMRC in their self-assessment tax return.

Pensions can be confusing, especially as the new pension rules mean there are now more options than ever before. Whether you are hoping to improve growth or access some money now, getting the right advice is crucial.

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Important information

Tax treatment depends on individual circumstance and may be subject to change.

The details provided in this article are for general information only and are in no way deemed to be financial advice. All of the material is correct as of the publication date, but could be out-of-date by the time you read the article. For our latest information and news, please see our articles section: https://www.portafina.co.uk/whats-new

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