What is auto-enrolment in pensions?

• A. A legal requirement for employers to automatically enroll eligible employees into a pension scheme with minimum contributions.
• B. A voluntary program allowing employees to opt in to a pension at their discretion.
• C. A government benefit that pays a pension to retirees automatically.
• D. A temporary savings feature only for new hires.

Answer: (A)

Auto-enrolment is a legal requirement for employers to automatically enroll eligible employees into a workplace pension scheme and to make minimum contributions. Eligible workers are typically those who are over a certain age (often 22 or older), earn above a set threshold, and aren’t already in a qualifying scheme. When enrollment happens, contributions come from both the employer and the employee, with the employee’s contributions benefiting from tax relief. Employees have the right to opt out within a cooling-off period if they don’t want to participate, and after opting out, the employer generally stops contributing. If someone remains eligible but opts out, they can be re-enrolled later at intervals. This system ensures people start saving for retirement even if they don’t actively choose to join a pension scheme.