Workplace Pensions

Discover how workplace pensions work, their benefits, and why auto-enrolment plays an essential role in securing your financial future.

What is a workplace pension?

A UK workplace pension is a retirement savings scheme set up by your employer to help you save for your future. It automatically deducts a portion of your pay, which is then invested to grow over time.

Along with other types of pensions such as the State Pension and personal pensions, the aim of a workplace pension is to provide you with an income when you retire, ensuring you have financial support in your later years.

Do all employers have to offer a workplace pension?

Yes. In the UK, all employers must provide a workplace pension under The Pensions Act 2008, ensuring employees save for retirement.

How to join a work pension scheme?

If you meet the age and earnings thresholds, you don’t have to do anything — you’ll be enrolled without having to lift a finger. For those who don’t meet the auto-enrolment criteria, you still have the right to ask your employer to enrol you.

Five reasons to have a workplace pension

Your workplace pension remains invested, even if you leave your job
Your employer contributes with you
You get tax relief from the government
It’s separate from the State Pension, adding to your retirement income
Pension investments typically earn more over time than cash savings

How does a workplace pension work?

You contribute a certain amount each pay period. In addition, your employer adds their share, and the government provides you with tax relief, effectively giving you ‘free’ money towards your retirement.   

The People’s Pension is a type of pension known as ‘defined contribution’. This means that the amount you get at retirement depends on the amount you’ve contributed along with charges and investment performance.

What are workplace pension contributions?

These are payments that you, your employer, and the government make into your pension. By law, the total workplace pension contribution amount must be worth at least 8% of your salary, with your employer paying at least 3% and you paying the rest. So, if your employer pays the minimum of 3%, you’ll then pay 5% to reach the 8% minimum.

What is workplace pension tax relief?

Some of the money you’d normally pay as income tax goes into your pension instead. For example, if you’re a basic-rate taxpayer, for every £80 you contribute to your pension, the government adds £20, boosting your savings.

Pension auto-enrolment

Workers who meet the criteria are automatically enrolled in a pension scheme by their employer. Individuals do have the option to opt out if they choose not to participate. Additionally, there’s a process of re-enrolment, which occurs every three years, ensuring those who opted out can effortlessly rejoin the pension scheme.

FAQs

For more information, see our help and support section.

Is it worth paying into a workplace pension?

Yes, paying into a workplace pension is worth it. It helps you save for retirement, with employer contributions and government tax relief that boost your savings – which is essentially free money. So, when planning your long-term finances, a workplace pension has a lot of advantages.

Is my money safe?

Yes, your money with us is safe. Your pension pot is kept safe in a trust, meaning it’s entirely separate from us and your employer. Read more about the security of your savings.

How much does my employer pay into my pension?

The legal minimum contribution for eligible workers is 8% of qualifying earnings, with at least 3% being paid by employers. Some employers may also choose to contribute more than the minimum.

Can I access or withdraw my pension savings before 55?

You can only claim money from your workplace pension after 55, which is rising to 57 in 2028. You may be able to access your pension before this age if you’re suffering from long-term health problems or a terminal illness.

You can access your money in your online account. For more information, you can learn about accessing your money on our help and support page

Can I invest my workplace pension?

We invest your money on your behalf in the shares of companies around the world and in loans to companies and governments called ‘bonds’. You have three investment profiles to choose from with us. Or you can self-select where your money is invested with our eight investment funds. Learn more on our investments page.

What happens to my pension when I leave?

If you leave your employer, your pension will stay in your existing workplace pension scheme and continue to be invested until you take your money out. Visit our help and support page on leavers for more information.

What happens to my pension if I die?

If you die, your pension savings will be passed on to your beneficiaries, usually as a lump sum or as an income, depending on the scheme rules. It’s important to keep your beneficiary nomination up to date to ensure we know who you want us to pay your pension savings to.

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