Skip Header

Advantages of a workplace pension

Your workplace pension can help you achieve the retirement you want by providing additional income on top of your State Pension.

Joining your employer’s pension plan means you’ll receive extra money to help boost your retirement income. You'll often receive additional benefits as part of the plan, too. Find out more about the advantages of having a workplace pension below or log-in to explore the benefits of your own plan in detail.

Your workplace pension at a glance

There are some key things to remember about your workplace pension. It can form the foundation of your retirement savings so it’s worth remembering these key facts:

  • Helps to make up the difference in income when you leave working life and enter retirement.
  • Your employer makes regular contributions.
  • You can contribute too.
  • You benefit from pension tax relief.
  • You can decide where to invest your money or you can leave it to the experts.
  • You choose what to do with your investment at retirement.
None

Why start now?

Your pension is yours for life. Even if you change employers, your pension pot remains yours. The longer you save the more time there is for your money to grow, although this is not guaranteed. So, the earlier you start contributing the better.

Consider David and Mike. David starts investing £100 a month when he is 25; Mike invests £200 a month from the age of 45. By retirement, both have saved the same amount (£48,000). However, assuming both their investments grow at 5% a year, David’s ends up with almost twice as much as Mike simply because his money is invested for longer.

None

This example uses assumed figures and is for illustrative purposes only

Unless you choose to transfer your pot, any money you invest in your pension will normally remain in your plan until you reach the minimum retirement age (currently 55) and decide to take your benefits.

Making up the difference
Growing your money
Taking control

Is your financial picture everything it could be?

Get your personal money check-up and see guidance and tools to help you plan for your future.

Will you meet your savings goals?

Answer 5 simple questions to see if your savings are on track to meet your retirement goals.

Learn more about pensions

Find out more about the types of pension available in the UK, and the differences between them.

What is a workplace pension?

A pension plan organised by an employer to help its employees save for later life. The employer pays in and the employee may or may not need to pay in too. They are also known as occupational or company pension plans. There are two different types of occupational pension plans: money purchase and final salary plans.

A money purchase plan is designed to build a capital sum to provide retirement benefits. Some money purchase plans are referred to as personal pensions or group personal pensions, these may be funded by an individual and also by an employer as a workplace pension. If setting up yourself, you can decide your provider and the amount of contributions payable independent of any employer. If the personal pension is a workplace pension your employer will choose the provider, set up the plan and may have conditions about the levels of contributions that are payable.

What is the State Pension?

A regular lifelong income payable by the UK government that you may qualify for once you reach State Pension age, currently age 65. In the UK, the amount you get depends on your National Insurance contribution record. The State pension age for men and women is currently 66. It’s due to rise further to 67 between 2026-28 and to 68 between 2044-46.

The State Pension age has changed over the last two decades and is reviewed at least once every five years, so could change in the future.