Step 1: should I join my workplace pension?

If you are in work, find out whether there is workplace pension scheme available to you. Indeed, you may already be a member without realising it.

If there is a workplace pension available, to which your employer contributes, you are generally best advised to belong to it. Opting out of it is effectively giving up part of your pay packet.

Although some people are lucky enough to work where the employer makes all the contributions, normally you will be expected to contribute as well. Contribution rates for staff can vary, most fall within a range of 3-8%, but the minimum level for an auto-enrolment pension is going up.

Before 6 April 2018, the statutory minimum contribution for a defined contribution scheme is 2% with at least 1% from the employer. From 6 April 2018 until 5 April 2019, it is 5% in total with at least 2% from the employer. From 6 April 2019 onwards, it will be a minimum of 8% in total with at least 3% from the employer. Tax relief on pension contributions increases their value – effectively the government will be contributing to your workplace pension scheme too.

There are different kinds of workplace pensions. You can read an introduction at What kind of pensions do employers provide?

If your pension is the defined contribution kind, how much money you might have available to help with your retirement will depend on the size of your pension pot, when and how you start using it. As a general principle, the more you can put into your pension pot and the earlier you do it in your working life, the more chance it has to grow into a more valuable sum.

But you should think about other pension income as well, so proceed to step 2 to check your state pension.

Note: This content is provided as general background information and should not be taken as legal advice or financial advice for your particular situation. Make sure to get individual advice on your case from your union, a source on our free help page or an independent financial advisor before taking any action.

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