What is a Workplace Pension?

Workplace pension plans are also known as auto-enrolment pensions. They are employer funded pension schemes designed to encourage personal saving for retirement.

If you are an eligible employee, your employer will automatically add you to their pension scheme and make contributions on your behalf. You will also have to make contributions. You can opt-out, but then you are in danger of not saving anything for your retirement.

Workplace Pensions

Employer funded pension schemes have been around for years.

Workplace auto-enrolment schemes are different because every eligible employee is automatically entered into the scheme, and they will have contributions deducted from their salary. The employer will also make contributions.

This is a personal pension plan in your name. All the employer does is run the scheme and pay money in to your account. If you leave, you can take it with you.

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Benefits of auto enrolment workplace pensions

Workplace pension auto-enrolment schemes are administered by the employer, so you don’t have to do anything.

If you qualify you will join the scheme automatically. If you don’t qualify, you still have a right to join the scheme, but your employer may not be compelled to contribute.

The plan is a personal contract in your name, and has all the benefits of a personal pension plan, but with compulsory employer contributions.

Why choose BBi Financial Planning for income protection insurance?

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Our advisers will take the time to understand exactly what you need protected and why, and advise you on the most suitable options for your budget.

Is a workplace pension right for you?

Employer contributions

Your employer must make contribtions to your plan of at least 3% if you are eligible.

That’s like getting a pay rise just because you decided to save for your retirement.

Freedom to opt-out

If staff are automatically enrolled into a pension scheme they don’t have to stay there. It’s possible to opt out. You won’t have money deducted from your salary, and your employer won’t contribute either.

But you also won’t be saving for the future.
Think carefully.

Simple and easy to change

Contributions are often deducted from your gross pay, so you don’t see money leaving your bank account.

Depending on the pension provider it can also be very easy to increase your contributions, giving you a head start on retirement.

What are the benefits of a workplace pension?

Workplace pension plans are administered and partially funded by your employer, so there’s very little you need to do. They contain all the benefits of a personal pension with the simplicity of automatic enrolment.

Long-term saving

Benefit from long-term compound returns

You can’t access your pension before age 55, which makes it an ideal way to invest for the long-term because you can’t be tempted to get at your savings early. It’s important to save for tomorrow but you also have to pay for today.

Tax-free cash

Take a lump sum from your plan tax-free

When you take the benefits from your plan, you are entitled to 25% of it tax-free. This is called the Pension Commencement Lump Sum, or PCLS.

Flexible income

Take money out how and when you want

When you retire, you can take your money in the way that suits you. It could be regular monthly income, or ad hoc payments whenever you need cash. Careful use of your PCLS can reduce your income tax too.

Learn more about your auto enrolment plan

We have some dedicated pages for workplace pensions which explain the rules and options about eligibility, contributions, opting out, and more.

Overview of auto enrolment

An introduction to auto enrolment or workplace pensions for you, your business and your staff.

Auto enrolment for employers

Everything you need to know to setup and manage a workplace pension scheme for your staff.

Auto enrolment for employees

Everything you need to understand your options if your employer has a workplace pension scheme.