What is a workplace pension?
One of the most efficient ways to save for your retirement, a workplace pension is in addition to a statutory state pension. Pension contributions are deducted from your salary, with your employer also making contributions to a minimum required level.
Regardless of how old you are, you need to start saving as soon as possible, especially if your employer is contributing – it’s tax-efficient and essentially, comprises additional funds for your retirement. The sooner you start saving, the sooner you can sail around the world, or sell your arts and crafts at fairs – however you plan to spend your retirement!
You are eligible for a basic rate of tax relief on your pension payments – currently set at 20%.
Who is eligible for a workplace pension scheme?
Employees aged between 22 and statutory state pension age who earn at least £10,000 per year must legally be auto-enrolled into a pension scheme. The £10,000 limit is subject to annual review and as a result, may change.
Employees aged between 16 and 74 who earn less than £10,000 per year have the right to voluntarily join a workplace pension scheme, which is known as opting in.
Before you join a workplace pension scheme, find out:
- If you get automatic enrolment
- What type of pension is on offer
- How much your contributions will amount to
- How much your employer will contribute (if this is over the minimum level required)
- How the money you pay into the scheme will be invested
- If you will be able to join the scheme at a later date if you choose to opt out
Don’t be put off by taking a pay cut in contributing to your company’s pension scheme – it is a vital step. You get to put something aside for a rainy day and you are also getting free money from the government and your employer to add to your pot.
If you are part of a workplace pension scheme and you change jobs, you can:
- Transfer your funds to the workplace scheme in your new job
- Transfer your funds to a personal pension
- Leave your funds in the pension to claim when you retire
Benefits of a workplace pension scheme
While every employer is now legally obliged to provide a workplace pension scheme, offering a scheme that is appealing to employees can bring considerable business benefits. When you are young, contributing to a pension can sound dull and dreary, but as workers get older it could be a decider in taking a job offer. The earlier a person contributes to a pension the better. It’s in the employer’s best interests to positively sell the benefits as then the employees will place more value on the company in providing those benefits.
If you’re interested in Workplace Pensions, please fill in the form below with your contact details and we’ll get back to you as soon as we can.