Pensions

Updating author: Kate Upcraft

Summary

• The state pension system combines a contributory state scheme, consisting of a basic retirement pension and an additional pension (previously the State Earnings Related Pension Scheme, now the state second pension (S2P)), with a private system of occupational and personal pensions. (See State Retirement Pension)
• The state pension age for men is 65. It is in the process of increasing from 60 to 65, for women. It will have reached 65 by 6 November 2018. It is due to increase to 66 for men and women by October 2020 and 67 by 2028.
• Depending on the size of their PAYE scheme and its reference number, starting from 1 October 2012, employers must enrol eligible employees into a qualifying pension scheme. (See Pensions auto-enrolment)
• Employers often offer employees membership of an occupational pension scheme, which may be contributory or non-contributory. Subject to the auto-enrolment provisions, employers must not attempt to compel employees to become members of a scheme, although membership can be automatic unless the employee requests in writing to opt out. Trustees oversee the operation of occupational pension schemes. (See Occupational pensions)
• People who do not have access to an occupational pension scheme may choose to invest in a personal pension plan. Employers may offer personal pensions to employees on a group basis. This is much easier to administer than an occupational pension scheme as trustees are not required. (See Personal pensions)
• From 8 October 2001 to 30 September 2012, many employers were required to give employees access to a stakeholder pension scheme. The requirement to designate a stakeholder pension was removed from 1 October 2012 with the introduction of pensions auto-enrolment. (See Stakeholder pensions)