1. About workplace pensions

A workplace pension is a way of saving for your retirement that’s arranged by your employer.

Some workplace pensions are called ‘occupational’, ‘works’, ‘company’ or ‘work-based’ pensions.

How they work

A percentage of your pay is put into the pension scheme automatically every payday.

In most cases, your employer also adds money into the pension scheme for you, and you get tax relief from the government.

When you can take your pension pot depends on your pension scheme’s rules - it’s usually 55 at the earliest.

What you’ll get and how you can take it depends on the type of scheme your employer offers you. You can usually take 25% of the money tax free.

If the amount of money in your pension pot is quite small, you may be able to take it all as a lump sum - 25% would be tax free but you’d pay Income Tax on the rest.

Workplace pensions and the State Pension

You can get money from a workplace or other pension on top of the State Pension.

Today the maximum basic State Pension you can get is £115.95 per week for a single person.

‘Automatic enrolment’

A new law means that every employer must automatically enrol workers into a workplace pension scheme if they:

  • are aged between 22 and State Pension age
  • earn more than £10,000 a year
  • work in the UK

This is called ‘automatic enrolment’.

Use the Pensions Regulator staging date calculator to check if the new law applies to you and when you’ll be enrolled. The calculator is for employers but also works for employees.

You may not see any changes if you’re already in a workplace pension scheme. But if your employer doesn’t already contribute to your pension, they will have to start when they ‘automatically enrol’ every worker.