About workplace pensions
A workplace pension is a way of saving for your retirement that's arranged by your employer.
Some workplace pensions are called 'occupational', 'works', 'company' or 'work-based' pensions.
You and / or your employer may already have chosen to pay more than the minimum contributions. If your payments are greater than the increased minimum levels, you will not need to pay any more.
How your workplace pension works
A percentage of your pay is put into the pension scheme automatically every payday.
In most cases, your employer and the government also add money into the pension scheme for you.
The money is intended to supplement your retirement income when you start getting the pension.
You can usually take some of your workplace pension as a tax-free lump sum when you retire.
If the amount of money you have saved is quite small, you may be able to take it all as a lump sum. 25% is tax free but you'll have to pay Income Tax on the rest.
You cannot usually take the money out before you're 55 at the earliest - unless you are seriously ill.
Workplace pensions (Auto Enrolment) and the State Pension
The pension you get from the government is called the State Pension. You get it when you reach State Pension age.
The money you get from a workplace or other pension could make it much easier for you financially when you are retired.
Millions of workers are being automatically enrolled into a workplace pension by their employer. Saving into a workplace pension is easy - you don't have to do anything.
Once you're enrolled by your employer, not only will you pay into the scheme, but so will your boss and you may also get tax relief from the Government.
Your employer will need to enrol you into a workplace pension scheme if you:
- are not already in one, or they've not enrolled you into one
- are aged between 22 and State Pension age
- earn more than £10,000 a year
- work in the UK
From 6 April 2018, the minimum contributions for the workplace pension will increase.
Auto Enrolment is regulated by the Pensions Regulator.
A pension is a long term investment, the fund may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax leglisation.