You and Your Pension

A pension scheme is a type of savings plan to help you put money away for later in life and has favourable tax treatment compared to other forms of savings; “You save a little of your income regularly during your working life, so you have an income in later life”.

However, don’t rely on the State Pension to keep you going in retirement, considering it is £175.20 (2020/21 rate), as this is far below what most people say they hope to retire on.

The State Pension changed on 6 April 2016 for people who reach State Pension age from then onwards. This is men born on or after 6 April 1951 and women born on or after 6 April 1953.

The old rules (which include basic State Pension and Additional State Pension) were complicated, making it difficult to know how much you’d get until you were close to State Pension age. With the new State Pension, people will know from a much younger age how much they’re likely to get, providing a solid base for their saving and retirement planning.

There are many different pension schemes to choose from but usually your employer will have a scheme in place as required by law; this is called automatic enrolment or auto-enrolment for short.

Auto-enrolment only applies to employees aged 22 years or over, but if you’re younger, as long as you’re earning £6,240 or more, you can still opt- in and benefit from the extra money from your employer. Of course, you can opt-out at any time but there is a certain time frame after opting out whereby your pension contributions are refundable, if you miss reclaiming in this timeframe, you will not be able to access your funds until after you retire.

If your work gives you access to a pension that your employer will pay into, then, unless you really can’t afford to contribute or your priority is dealing with unmanageable debt, you should seriously consider staying in.

Of course, if your employer will contribute to your pension regardless of whether you pay into it, then you should join the scheme whatever your financial circumstances – this is a no-brainer.

An attraction of saving into a pension is the tax relief you can benefit from. All taxpayers can get 20% tax relief on their contributions from the government. Higher rate taxpayers can receive additional tax relief through self-assessment. You can find additional information at

For most people there is no longer a fixed retirement age (the age at which you stop working). And all employees now have the right to request to work flexibly and have it seriously considered by their employer. You therefore could have more choice about when and how you retire.

You are at liberty however, to access your workplace pension from the age of 55. But by retiring at 65 instead of 55, an average earner could increase their pension pot by 60%.

If you haven’t already done so, contact your employer to get the details of your pension scheme and you can track your pension pot as it grows.

If like most people you have had more than one job in your life-time, you may have more than one pension pot. If you do, it is advised to combine those pension schemes before you are ready to withdraw from your pension.

Do note, you will not get your new State Pension automatically – you have to claim it. You should get a letter no later than 2 months before you reach State Pension age, telling you what to do. If you have not received an invitation letter, but you are within 4 months of reaching your State Pension age you can still make a claim.

The quickest way to get your State Pension is to apply online. The GOV.UK website have more information on this.