What is a workplace pension? | ƹƵ


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What are workplace pensions?

Workplace pension schemes are run by employers. Over time, contributions to your workplace pension scheme make up your pension pot. These contributions come from you (taken directly from your wages) and your employer.

Am I eligible for a workplace pension?

All employers have to offer a pension scheme – this is known as automatic enrolment. They also have to contribute a set amount of your wage to your pension pot.

You’ll be automatically enrolled into a scheme if:

  • you’re aged over 22
  • you’re under State Pension age
  • you earn more than £10,000 a year
  • you’re not already in a workplace pension scheme
  • you work in the UK.

You can opt out of the pension scheme at any time, usually by filling in a form and returning it to your employer or pension provider. If you opt out, your employer will need to re-enrol you every 3 years, you can opt out each time if you'd like. If you can afford to, it’s a good idea to join the scheme.

The government has created automatic enrolment to encourage people to save money for retirement, as the State Pension alone isn't enough for most people to live on.

How much do I need to contribute to my pension pot?

The minimum contribution is 8%, of which:

  • 5% comes out of your take-home pay
  • 3% is made up of your employer's contributions and tax relief.

You can also make additional payments if you want to.

Try the pension calculator

MoneyHelper's pension calculator can help you work out how much money you'll need in retirement and how much you can expect.

What happens to my pension pot if I change jobs?

If you change jobs, you have a couple of options. You can:

  • leave the pension in your old employer’s scheme and access it once you reach the scheme’s pension age
  • transfer money to your new workplace pension scheme (this isn’t possible for all schemes, so you may need to talk to your pension provider or an independent financial adviser about your options).

If you’ve lost track of old pensions or you’re not sure if you were enrolled in an old workplace pension scheme, there are ways you can find them.

Find out more about tracing old pensions

When can I withdraw my pension?

In April 2015, the government introduced rules which allow everyone aged 55 and over full access to their pension pot, as well as increased choice over what to do with the money.

When accessing your pot, it's worth thinking about how you'll fund the future of your retirement, and avoid making any hasty decisions that may leave you worse off in the long-term.

MoneyHelper provides a free guidance service, Pension Wise, backed by the government. You can book an appointment to discuss your pension options with a pension specialist.

Can I leave my pension pot to my spouse or family?

You can usually choose someone, such as your spouse, a family member or a friend, who'll get your pension pot if you die before reaching your scheme’s pension age. You usually need to choose this person in writing.

If you want to, you can change your nomination later down the line. But it's a good idea to check the rules of your pension scheme when making decisions relating to your pension pot.

Will I still get the State Pension if I have a workplace pension scheme?

Saving into a workplace pension doesn't affect your entitlement to the State Pension because your State Pension is based on your record of National Insurance contributions, which you build up over your working life.

Find out more about the State Pension

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Last updated: Apr 08 2024

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