All employers must offer a workplace pension scheme to their staff, and automatically enrol those who fit certain criteria.
They include people who earn at least £10,000 a year per job, and are aged between 22 and state pension age. But not those aged under 22 and the self-employed.
Workers can opt out if they do not want to save. Otherwise, 5% of their earnings above £6,240 a year and a contribution from their employer worth 3% of earnings, is automatically saved into a pension pot.
The idea is to encourage saving for retirement from an earlier age, to top up the state pension in later life. It has been widely regarded a success since its phased introduction in 2012, with relatively few people opting out.
Those paying into a workplace pension also get tax relief on what they pay in.
“So, if you are a basic rate taxpayer who would have paid 20% income tax it means you get 20% tax relief on your pension contribution,” says Helen Morrisey, head of retirement analysis at Hargreaves Lansdown.
“This means that a £100 pension contribution would only cost you £80.”
She adds: “For a higher rate taxpayer who would have paid tax at 40% that £100 contribution would only cost them £60.”