A Guide to Workplace & Company Pensions

If you're an employee in the UK, you almost certainly have a workplace pension. Thanks to auto-enrolment, millions of us are now saving for retirement, many for the first time.

But being in a pension is not the same as having a plan for it.

Your workplace pension is often the easiest and most powerful tool you have for building retirement wealth, but most people leave it running on autopilot. They are often unaware they are in the "default" fund, paying the legal minimum, and potentially missing out on thousands of pounds of "free money" from their employer.

Here, we'll cover what your workplace pension is, how it works, and how an independent financial adviser can help you take control and maximise this vital asset.

What is a workplace pension?

A "workplace pension" (or "company pension") is a retirement savings plan set up by your employer.

If you're over 22, under State Pension age, and earn over £10,000, your employer is legally required to automatically enrol you into this scheme. This is a defined contribution (DC) pot, where you, your employer, and the government (via tax relief) all pay in.

The legal minimum total contribution is 8% of your "qualifying earnings" (a band of your salary, not the whole amount). This is typically made up of:

• 5% from you (this includes 1% tax relief from the government)

• 3% from your employer

This 8% is a great start, but it is rarely enough for a comfortable retirement.

Get independent advice about your pension

Get Started

The Default Trap: Are you paying enough?

When you're auto-enrolled, two "default" decisions are made for you:

1. Your Contribution Level: You are put on the minimum 5% contribution.

2. Your Investment Fund: Your money is put into the scheme's "default fund."

This fund is a one-size-fits-all solution, often a "lifestyle" or "target date" fund that automatically becomes more cautious as you near retirement. For many, this is fine. But it may not be the best fit for your personal goals, your attitude to risk, or your other investments.

The "Employer Match": The most important benefit

Here is the single most important secret about workplace pensions: many employers will pay in more than the 3% minimum, if you do too.

This is called "contribution matching" or "employer matching."

Example of an Employer Match:

• Your employer's rule might be: "We will match whatever you put in, up to 6%."

• If you only pay the 5% auto-enrolment minimum, your employer will only pay in 5%.

• But if you increase your contribution to 6%, your employer will match it and also pay in 6%.

By paying in just 1% more, you have gained an extra 1% from your employer for free. Turning this down is like refusing a pay rise.

How our independent advisers can help

Your workplace pension is a fantastic asset, but it's just one part of your financial puzzle. An independent adviser's job is to review that pension and build a complete retirement plan around it.

Here are the key, practical services our advisers provide for employees:

1. We Find Your "Free Money"

Your employer's matching scheme rules are often buried in a company handbook. The first thing we will do is find this document and identify your employer's maximum match. We will then help you create a budget to ensure you are contributing enough to get every single penny of that free employer money.

2. We Review Your Investment Funds

Are you in the right fund? We will:

• Analyse the "default" fund: We'll check its performance, charges, and strategy to see if it's right for you.

• Review the alternatives: We will analyse the full list of other "self-select" funds your workplace scheme offers.

• Provide a clear recommendation: We can help you move your pot into a different fund that may be a better fit, such as a lower-cost tracker fund, a fund with a different risk profile, or one that matches your ethical (ESG) preferences.

3. We Help You Decide Where to Save Next

Once you've maximised your employer match, where should your next pound of savings go? We help you solve this puzzle by comparing your options:

• Option 1: Your Workplace Pension. Good for simplicity and (often) low charges.

• Option 2: A Personal Pension (SIPP). Good for wider investment choice.

• Option 3: An ISA. Good for flexible, tax-free access before retirement.

We'll create a strategy, for example: "First, pay 6% into your workplace pension to get the full match. Second, fill your ISA for medium-term goals. Third, any extra long-term savings go into a SIPP for maximum investment choice."

4. We Advise on Consolidation

Should you move your old pensions into your current workplace scheme? It might be a great idea for simplicity, but it could be a terrible one if the charges are high or the investment choice is poor. We will analyse your current scheme to see if it's a "good" home for your old pots or if you'd be better off using a separate SIPP.

Ready to take advantage of a free pension review and a non-obligation chat with an independent financial adviser? Get started here.