Tomorrow is worth saving for

Did you know that from next month UK employers will have to, by law, enrol most staff into a pension scheme? Even if you’re not employed at the moment, it’s well worth knowing about it in case you got back to employment, or your partner is employed or if you plan to employ staff yourself. Today’s guest post is from Brenda Vannan, Head of Employer Installation at the National Employment Savings Trust (NEST).

As a busy mum there are so many things to think about and do right now that it can be difficult to take time out to think about the future. We’re also often guilty of thinking about others first, putting their financial needs ahead of ours, particularly when it comes to our children. But one of the best ways to give your family peace of mind could be to make sure you will be ok as well. And that means taking responsibility for your long term financial security.

Next month a new law is coming into effect that should make this task far easier for millions of people, including around 5.5 million women. For the first time employers will have to automatically enrol most staff into a workplace pension scheme that meets or exceeds certain government standards and make a contribution.

You’ll be automatically enrolled if:

  • you’re aged at least 22 and under State Pension age, and
  • you earn more than £8,105 for 2012/13 tax year
  • you’re working, or you ordinarily work, in the UK
  • you’re not already a member of an existing workplace pension scheme that meets automatic enrolment requirements .

There are minimum contribution levels, which start at a low percentage of a set amount of your salary and increase gradually over the next few years. Contributions will be calculated on any earnings between £5,564 and £42,475, known as qualifying earnings.

So if you earned £15,564 for example, then your qualifying earnings would be £10,000 (£15,564 less £5,564). Qualifying earnings figures will be reviewed each year by the government.

To start off, your employer will pay 1 per cent of your qualifying earnings and you’ll pay 0.8%. An extra 0.2% will be added as tax relief, taking total contributions to 2%. Both you and your employer can pay more than this if you choose. By October 2018 combined contributions will need to be at least 8 per cent of qualifying earnings, of which your employer will pay 3 per cent unless they choose to pay more.

Everyone will have the option to opt out if they want to, but if you stay opted in and continue to make contributions, your pot will continue to be topped up by your employer and the government through tax relief. So for example, based on a two per cent contribution including one per cent from your employer and tax relief, £10 going into your pot could in fact only cost you £4.

The government is introducing the changes in stages, starting with the largest employers in October 2012. Smaller employers are affected by size over the following six years.

NEST is a not-for-profit scheme set up by government to ensure workers have access to a good quality low-charge pension. It is one of the schemes that employers can choose to meet their new duties when the law comes into effect.

Automatic enrolment will make it easier and cheaper to save for tomorrow and we want people to know about it. We have been running a campaign called ‘Tomorrow is worth saving for’ to raise awareness of NEST and get people thinking about how pension saving is relevant to everyday life.

Throughout June and July we asked consumers via Facebook, Twitter and Pinterest to come up with snappy headlines and images for an advert that illustrates what makes their tomorrow worth saving for. People were asked to think about the things they enjoy doing today, such as going to the cinema or going out with friends, that they will still want to do when they retire.

We’ve whittled down all the brilliant ideas we had to a shortlist of three and we now need your vote to pick a final winner.

You can see the shortlisted entries and have your say here:

The winning ad will be published in two national newspapers to herald the start of automatic enrolment in October.

For more information about NEST and our campaign, see our Facebook page at



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