Workplace Pension FAQs | Retirement (2023)

Saving into a pension

Is a pension right for me?

For many people, joining aworkplace pension is a good way of building up a pot of money to provide an income in retirement. You'll get tax relief on your contributions and your employer may pay in too, giving a significant boost to your savings.

However there may be times when paying into a pension may not be the best option. For instance if you have outstanding debts which need to be paid off or there are other financial priorities. Saving into a pension plan is not for everyone. Joining a plan may not be suitable for you, particularly if these savings could affect your entitlement to any means tested state benefits.

Your employer may also stop paying in to your pension if you stop, check with your employer.

Please note, you may have to pay tax when you take money out of your pension.

Do I have to join my workplace pension scheme?

Since 2012, employers have been required to automatically enrol their eligible employees into a workplace pension scheme. If and when you’re notified that you’ve been automatically enrolled, you can choose to opt out, but you may be missing out on benefits, such as contributions from your employer and tax relief.

Your employer is required to enrol you again every three years if you are still eligible and not currently a member of their pension scheme. You will have the right to opt out again.

Find out more about automatic enrolmentPDF file: Being prepared PDF size: 271KB

How do I join my workplace pension scheme?

If you are eligible, you'll be automatically enrolled into the pension scheme. Yours and your employer's contributions will be put into the default investment option. You’ll be able to move your money into the investment options of your choice once we have received your first contribution.

Once you've been enrolled you'll receive a notification explaining the pension scheme and your options to stay in or opt out.

If you’re automatically enrolled you can visitWorkSave Choice (subject to your scheme using Choice) to review your scheme and personal details or to opt out if you do not want to stay enrolled in yourworkplace pension scheme.

Even if you are not eligible to be automatically enrolled, you may still be able to join your workplace pension scheme. Talk to your employer about how you can join.

Do I have to contribute every month?

You can stop contributions to your pension at any time without penalty. We'll still take charges from your fund even if you stop contributions.

You can restart contributions at any time, again without penalty. If your employer is deducting the contribution from your salary they may restrict when you can restart. Your employer will also have to auto-enrol you into their scheme again every three years if you are still eligible.

Think about why you've decided to stop contributions, as it will have an effect on your retirement income. It's worth bearing in mind that saving regularly can be easy to stop but difficult to start up again. After a month or so you may not notice the contribution going from your salary, but if you decide to stop, starting again can be hard. Your employer may also stop paying in to your pension if you stop, check with your employer.

Use our retirement planning toolto help you plan ahead and see if you're on track to fund the retirement you want.

Why have I been enrolled into my workplace pension scheme again?

If you’ve previously opted out of the scheme, re-enrolment is an opportunity to start saving into your pension pot. Your employer is required to enrol you into the workplace pension scheme every three years if you’re still eligible and not currently a member of their pension scheme.

You have the right to opt out again within one month of being re-enrolled.

(Video) What is a workplace pension? - Pensions 101

Can I transfer other pensions into my Legal & General plan?

Although your pension with Legal & General may accept transfers, we would always recommend you speak to a financial adviser before transferring any other pensions you have to us.

Your other pension providers may charge you if you transfer out of their plan. There may be other benefits or guarantees attached to your pension that you might forfeit if you decide to transfer it. If you are a member of a defined benefit scheme with a transfer value of more than £30,000, you’ll need to take advice from an adviser authorised by the Financial Conduct Authority before you can transfer it.

Please note Legal & General cannot provide financial advice. If you want help to make your own investment choices, you should speak to a financial adviser. You can visit Unbiased to help you find a financial adviser in your local area. Advisers will usually charge a fee for their services.

If you decide not to speak to a financial adviser, you can contact our Employee Support Team on 0345 070 8686 to discuss transfer options that may be open to you.

Lines are open between the hours of 8:30am and 7pm Monday to Friday.

Call charges will vary. We may record and monitor calls.

How much can I save in my workplace pension?

You can contribute up to 100% of your relevant earnings or £3,600 gross, if greater, into your pension plan and still get tax relief.

If your contributions go over the annual allowance including employer contributions (currently £40,000 in the tax year 2022/2023) you will incur a tax charge up to the highest rate you pay.

For those with earnings over £200,000 a year, and £240,000 a year when total pension contributions are included, the annual allowance may reduce below £40,000 but not less than £4,000. Please note it may be possible to carry forward unused annual allowances from up to three previous tax years.

If you have started drawing a flexible income from your pension pot, your annual allowance will reduce to £4,000 a year (this is called the Money Purchase Annual Allowance (MPAA)) and you can't carry forward any unused allowances. If you want to carry on building up your pension pot this may influence when you start taking income. Taking your tax-free cash lump sum without any other income doesn't affect your annual allowance.

Making changes

What happens to my pension if I change my employer?

Upon leaving your current employer you'll have some options available to you with regard to your pension.

  • The plan will still be invested for you and annual management and fund management charges will continue to be deducted. You may be able to continue payments or start again in the future depending on the type of scheme your new employer has set up. Please note, if annual management charges plus fund management charges are greater than any fund growth, the value of your investments will reduce.
  • At any time in the future, you can transfer the pension you hold with us to another provider. We won't charge you to do this.

As soon as we receive the last payment from your old employer, we'll send you a leaver's pack which will explain all your options in more detail.

How do I change my contact or address details?

You can change your contact details now by logging into Manage Your Account.

You can also call our Employee Support Team on 0345 070 8686.Lines are open between the hours of 8:30am and 7pm Monday to Friday.Call charges will vary. We may record and monitor calls.

Or send us your new details in writing. Please make sure you quote your plan number.

Legal & General
Document Control Team
6th Floor
Brunel House
2 Fitzalan Road
Cardiff
CF24 0EB

(Video) How does a workplace pension work?

How do I add or change a beneficiary?

Adding a beneficiary means nominating someone you wish to receive any benefits from your pension in the event of your death.

All you need to do is inform us of the request in writing. Some schemes allow you to do this online via Manage Your Account.

Log in or Register now.

An online form is also available on your scheme microsite. If you don’t know where that is, check with your employer. There will usually be a link on your employer’s intranet site. If you are unable to do this online, simply send us a letter, quote your plan number and give us the full name and address of the person you want added to your plan.

If you want any beneficiaries removed, likewise simply inform us of the change in writing (although please note, once you've nominated a beneficiary you can't go back to having no beneficiary at all).

How do I change my contribution amounts?

If your pension contributions come straight from your salary then you need to tell your payroll department about any changes you wish to make to them. Your employer may also restrict the number of times you can do this in a year.

If you pay by your own direct debit simply call us or send us a letter or email, quote your plan number and tell us what you'd like to change your payments to. You can increase or decrease your regular contributions, but you may have to meet a minimum amount.

Can I cancel my plan?

If you have been automatically enrolled, you can opt out within one month and you’ll get your money back and be treated as if you never joined the plan. Your enrolment communications will explain how to do this. If you don’t opt out within one month of being automatically enrolled you can stop contributing at any time. If you do this, both your contributions and any made by your employer up to that point will remain invested in your pension pot until you take your benefits, or you can transfer them to another pension scheme.

If you have not been automatically enrolled, after you have joined the plan, we will send you a letter containing details of what you will need to do if you decide to cancel and ask for any money back that you have paid. The letter includes a form, called a ‘cancellation notice’. If you decide to cancel, you will need to complete this notice and post it back to us at the address shown on the notice within 30 days of receiving it.

After this period HMRC rules state that your money must remain invested in a pension scheme until you take benefits. For the vast majority of people this will mean that you won’t be able to take benefits until you have reached age 55.

Retirement

What income will I need in retirement?

Our retirement planning tool helps you understand how much you may need to pay in based on the retirement income you hope to get. If you join or are already in a company pension scheme, you should receive an annual statement from your pension provider showing the progress of your savings over the last year.

The size of your pension pot will depend on how much you pay in and for how long, together with how your chosen investment funds perform and the charges you pay. Generally speaking, the sooner you start and the more you pay in, the more you'll benefit at retirement.

Don't forget you may want to take into account any other savings or investments that you're relying on to provide an income when you retire.

In general, tax treatment depends on your individual circumstances and may be subject to change in the future.

Ifyou are uncertain how to proceed we recommend youseek financial advice. You can find an adviser in your local area by visiting unbiased.co.uk. Advisers usually charge for their services.

Will the State Pension be enough for me in retirement?

You become entitled to a State Pension by paying National Insurance contributions during your working life. The more years you have paid National Insurance the larger your State Pension, with the maximum entitlement currently based on contributions of 35 years or more.

Like the name suggests, the State Pension is unlikely to give you enough income to fulfil all your lifestyle wants and needs in retirement. In the current tax year (2021/22), it only gives you £179.60 per week. If you were born before 6 April 1951 (if male) or 6 April 1953 (if female) the basic State Pension is £137.60 per week (for tax year 2021/22). And this amount could be even less if there have been any gaps in your National Insurance contributions record.

You might be able to get more but this will depend on your personal circumstances, for more information visit GOV.UK.

Find out more about State Pensions and see how much you'd be likely to receive from the state when you retire with a State Pension Forecast.

By joining your employer's pension scheme your income in retirement could be significantly more than if you just rely on the state as both you and your employer contribute.

(Video) Pensions Explained UK | Pension Basics for everyone

What are my options for accessing my pension pot?

The best place to get information about your options for your scheme is on your employer pension scheme website. If you don't know where that is, check with your employer. There will usually be a link on your employer’s intranet site.

Learn more about your options including a guaranteed income, flexible income, lump sums and cash.

You can also download our guide to taking money from your pensionPDF file: Taking money from my pension PDF size: 339KB .

I’m retiring in the near future. Where can I get a retirement quote?

You can request a retirement quote from our Claims team by ringing them on 0345 070 8686.

Lines are open between the hours of 8:30am and 7pm Monday to Friday.

Call charges will vary. We may record and monitor calls.

Types of pension

What’s a defined contribution scheme?

A personal or workplace pension where contributions and investment performance dictate how much money you have available to provide an income for retirement. Also referred to as ‘money purchase’ schemes as whatever pot you have built up can be used to provide an income in retirement.

What’s a defined benefit scheme?

The most common type of defined benefit scheme is a final salary scheme. The benefits depend on:

  • Your number of years of service.
  • Your final salary at the time you stop working for the employer.
  • The accrual rates of the scheme (determined by your employer), which determines the percentage of your final salary you will get.

Defined benefit schemes can be:

  • Contributory - both the employer and employee pay contributions to provide benefits.
  • Non-contributory - only the employer pays contributions.

For further information on defined benefit schemes please speak to a financial adviser. You can find an adviser in your local area by visiting unbiased.co.uk. Advisers usually charge for their services.

Funds and investing

What investment options are available through my Legal & General plan?

You will need to check your policy documents or member’s booklet to find out whether you have a:

  • WorkSave Pension Plan.
  • WorkSave Mastertrust Plan
  • WorkSave Pension Trust.
  • Group Stakeholder Pension Scheme.
  • WorkSave Buy Out Plan.
  • Trustee Buy Out Plan.

You can find more information about the investments available to you by logging into Manage Your Account or visiting your scheme microsite/website. Our ‘Funds’ section lists the investments generally available to each of the above products. Your scheme may have chosen different investments for you than those listed.

What investment option is right for me?

The vast majority of people who join a workplace pension scheme invest in its default investment option which is designed to be broadly suitable for the majority of savers. You should remember that a default option has not been assessed against your own personal circumstances and so it might not be the right investment choice for you.

If you wish to choose your own investment options, we can help you understand the things you need to take into account. An important element of this is how much investment risk you're prepared to take in pursuit of a higher potential return.

What’s a Lifestyle profile?

A lifestyle is an investment strategy that changes the funds you are invested in as you approach your retirement date. They typically invest your money in funds that offer the potential for long term growth when you’re a long way from your retirement date. Then, as you approach retirement, they switch your money into different funds generally with the aim of reducing volatility or targeting a specific investment objective.

Please note - you can't combine a lifestyle profile with any other fund for any one benefit type, e.g. regular contributions, or a single contribution or transfer value. If you're already invested in a lifestyle profile and want to change your investment, you'll have to switch your existing pot and redirect any future payments for that benefit type. Likewise, if you'd like to start investing in a lifestyle profile, you’ll have to switch your existing pot and redirect future payments into the lifestyle profile for that benefit type..

Find out more about lifestyle profiles.

How do I change the funds I’m invested in?

If your scheme allows, you can make changes to your investments by logging in to Manage Your Account.

You can also make changes by calling us or sending us a request by letter or email. Please make sure you quote your plan number. If you make your request in writing you will need to complete a changing your investments form which you can download from the document library.

Please note - you can't combine a lifestyle profile with any other fund for any one benefit type, e.g. regular contributions, or a single contribution or transfer value. If you're already invested in a lifestyle profile and want to change your investment, you'll have to switch your existing pot and redirect any future payments for that benefit type. Likewise, if you'd like to start investing in a lifestyle profile, you’ll have to switch your existing pot and redirect future payments into the lifestyle profile for that benefit type.

Find out more about lifestyle profiles.

The value of your pension pot may fall as well as rise, and is not guaranteed. You should choose your funds carefully and review them regularly, particularly if you are close to retirement.

(Video) Pensions UK explained - Pension Basics

FAQs

Can you lose your workplace pension? ›

If you have a defined contribution workplace pension, a pension provider usually looks after your pension fund. If your employer goes bust, you won't lose your pension fund.

Does my employer have to match what I put into my pension? ›

An employer doesn't have to match employee contributions. Currently, the minimum contribution is 8% of qualifying earnings, of which at least 3% must be paid by the employer.

Can I continue to pay into workplace pension if I leave? ›

Employees can continue to pay into their pension, even if they've left your employment or the pension scheme. They can set up regular contributions by completing the personal payment forms.

What happens to a workplace pension when you leave? ›

Leaving your pension scheme happens when you leave your employer, you decide to opt out of the scheme, or you stop making contributions to it. What you've built up still belongs to you. You usually have the option to keep the pension where it is or move it to another pension scheme.

What can cause you to lose your pension? ›

A number of situations could put your pension at risk, including underfunding, mismanagement, bankruptcy, and legal exemptions. Laws exist to protect you in such circumstances, but some laws provide better protection than others.

Is a workplace pension really worth it? ›

For many people, paying into a workplace pension is a good idea, even if you have other financial commitments, such as a mortgage or loan. This is because you could benefit from contributions from your employer and tax relief from the government. Over time, this money adds up and can grow.

How does a workplace pension work? ›

A workplace pension scheme is a way of saving for your retirement through contributions deducted direct from your wages. Your employer may also make contributions to your pension through the scheme. If you are eligible for automatic enrolment, your employer has to make contributions into the scheme.

Can I pay a lump sum into my workplace pension? ›

4. Lump in a lump sum. If you come into some cash, paying a lump sum into your pension is a quick and easy way to give it a boost. And as with other payments into your plan, the government will top it up with tax relief (up to a certain limits).

What is the minimum employer pension contribution 2022? ›

However, by law, you and your staff have to pay a minimum amount into your scheme. This is set at 8% of your member of staff's earnings. You, the employer, must pay at least 3% of this, but you can choose to pay more.

When you leave a company do you lose your pension? ›

Question: Can I get my pension money if I am laid off? Answer: Generally, if you are enrolled in a 401(k), profit sharing or other type of defined contribution plan (a plan in which you have an individual account), your plan may provide for a lump sum distribution of your retirement money when you leave the company.

Can I withdraw my pension fund if I resign? ›

If you resign, or you are retrenched, you are allowed to withdraw from your employer-sponsored retirement fund (that is a pension or provident fund). The "benefit" you can claim is the balance in your retirement account.

What is the average pension payout? ›

The median annual pension benefit ranges between $9,262 for private pensions to $22,172 for a state or local pension, and $30,061 for a federal government pension and $24,592 for a railroad pension.

How do pensions pay out? ›

Your traditional pension plan is designed to provide you with a steady stream of income once you retire. That's why your pension benefits are normally paid in the form of lifetime monthly payments. Increasingly, employers are making available to their employees a one-time payment for all or a portion of their pension.

Do you get all your pension money back? ›

If you leave your pension scheme within two years of joining, you might be able to get your contributions refunded. This will depend on the type of scheme. It's worth being aware that if you do this, you won't have any pension savings from this time.

Is it worth starting a workplace pension at 55? ›

You can still be financially secure at retirement even if you start saving with a workplace pension later in life. Every time you pay into a workplace pension, you'll get contributions from your employer and extra money from government tax relief if you're eligible.

Is a workplace pension better than a private pension? ›

One of the key differences between workplace pensions and personal pensions is tax relief. With a workplace pension, your contribution is taken before tax which can reduce the overall tax you pay on your salary. However, with a personal pension, your contributions typically happen after tax.

What are the disadvantages of a pension? ›

Disadvantages
  • Pension drawdown income is not guaranteed and there is a risk that you may run out of money in retirement.
  • If your investments perform poorly you may need to reduce the income you take.
  • You will need to regularly review your investments to ensure you are still on track.

How do I find out how much is in my workplace pension? ›

Whether you have a personal pension, workplace pension or self employed pension, you can check contributions and the total value of your pot by reading your pension statement. A pension statement is usually sent to you by your pension provider once a year, and shows you a complete breakdown of your pension.

Can I withdraw my workplace pension before 55? ›

Pension release under 55

Taking your pension before 55 isn't against the law, but it's not recommended due to the large fees you'll be charged. You also risk running out of money before retirement and having to work much longer than you'd planned.

What percentage of salary goes to workplace pension? ›

You and your employer need to contribute a total of at least 8% of your salary to your pension. If your employer contributes 3% (the minimum level currently required of them by law), your minimum contribution will be 5%, to make 8% in total.

Is it better to take lump sum or monthly payments for pension? ›

A Lump Sum Gives You More Control of Your Assets

By accepting a lump sum from the pension, you gain the control over your income assets. Even if the income generated from the lump sum is less than the promised annuity payment from the pension, you gain control over the assets.

Can I take 25% of my pension tax-free every year? ›

You can take money from your pension pot as and when you need it until it runs out. It's up to you how much you take and when you take it. Each time you take a lump sum of money, 25% is tax-free. The rest is added to your other income and is taxable.

How can I avoid paying tax on my pension? ›

If you have a defined contribution pension (the most common kind), you can take 25 per cent of your pension free of income tax. Usually this is done by taking a quarter of the pot in a single lump sum, but it is also possible to take a series of smaller lump sums with 25 per cent of each one being tax-free.

How much pension should I be paying each month? ›

If you start paying into your pension at the age of 30, you divide by two which gives you 15. This is the percentage of your pre-tax salary you should ideally be paying into your pension pot until you retire. For example: If you're 30 years old, 15% of your salary should be pension contributions.

How much should I have in my pension at 50 UK? ›

At the age of 50, ideally, you would have wanted to save over 4 times your annual salary if you would like to retire comfortably. At this age, you should be considering putting 25% of your salary into your pension pot, if not more.

How much should I have in my pension at 40? ›

So, therefore, It is suggested that at the age of 40, you should really be putting 20% of your wages into your pension pot. This is a 5% increase up from the suggested amount in your thirties. Of course, this percentage is just a recommendation and every circumstance is different.

How long does it take for pension to pay out after resignation? ›

It typically takes between 4 and 12 weeks to process a retirement fund pay-out (21 business days at 10X Investments), from the time your last contribution is invested or the required instruction forms are received by the administrator (whichever is the later).

How much will I lose if I take my pension at 55? ›

How much will I lose if I take all my pension at 55? There are no penalties for taking your whole pension pot at 55. However, leaving some or all of your pension invested gives it the opportunity to continue to grow, producing additional wealth you may benefit from in future.

Is it better to resign or retire? ›

The Difference Between Retirement and Resignation

Another distinction: Retirement is usually a permanent decision to leave the workforce (although you can continue working after retirement) Resignation is usually a decision to switch to a different job.

Can you lose your pension if sacked? ›

If I get sacked, what happens to my pension? If you lose your job, whether you're fired or through redundancy, your employer will stop paying into your pension. The pension will continue to be managed by your pension provider and will continue to grow in line with its investments.

Can a pension get lost? ›

You are at most risk of having lost track of a pension if you have: Changed jobs multiple times With the introduction of pension auto-enrolment in 2012, in which eligible employees are automatically enrolled into a company's scheme, it means many more people are now likely to end up having multiple pension pots.

Can you lose your pension UK? ›

Your employer cannot touch the money in your pension if they're in financial trouble. You're usually protected by the Pension Protection Fund if your employer goes bust and cannot pay your pension. The Pension Protection Fund usually pays: 100% compensation if you've reached the scheme's pension age.

Can you lose your retirement if fired? ›

The short answer is no. Unfortunately, the misconception that you can lose your federal retirement if fired persists even among federal employees. Many employees incorrectly believe that they will lose their federal retirement benefits if the agency fires them.

Can a company take away your pension if you are fired UK? ›

So, does being dismissed affect your pension? If you are dismissed lawfully, then being dismissed can affect your pension. The lawful dismissal of an employee causes a loss in pension contributions or a reduction in value of pension benefits.

Who can trace my pension? ›

Contact your former employer

If you want to trace a workplace pension – a scheme arranged by a previous employer – your first point of contact should be the employer. However, if your employer provided access to a personal or stakeholder scheme, contact the pension provider if you know their details.

How do I find out my pension balance? ›

Look at your pension statements. Your provider should send you an annual pension statement once a year that tells you how much is in your pot and gives an estimate of how much you might get when you start taking your money. Many providers also let you track your pension on their website.

How many years NI do I need for a full pension? ›

To get the full basic State Pension you need a total of 30 qualifying years of National Insurance contributions or credits. This means you were either: working and paying National Insurance.

How much money can you have before you lose your pension? ›

It comes down to the amount of savings you already have, plus all sorts of asset types combined. For example, if you are a single homeowner you can get a full pension with an asset limit of $270,500. As a couple with a home and combined assets your limit is reached at $405,000 to receive a full pension.

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