Why save with a workplace pension?

A workplace pension is a scheme set up by your employer on your behalf to help you save for retirement. Many UK workers have been automatically enrolled into workplace pension schemes like Nest so that you can prepare for the future simply and smartly.

If you have been auto-enrolled into a workplace pension it is because your employer is legally bound to do so. This is to help you save for later in life.

Workplace pensions are different to most other types of pension because both you and your employer will make contributions.

The minimum contribution set by the government that you and your employer pay into your workplace pension is 8 per cent.

There are lots of benefits to saving with a workplace pension like Nest.

• You get extra money on top of your salary in the form of employer contributions.
   So starting to save into a workplace pension is a bit like getting an immediate pay rise from  your  employer.
• You receive tax relief on money you put into your pension as it comes out of your earnings.
• You don’t need to worry about managing your pension as Nest keeps everything in order
   for you.
• You can work towards the quality of life that suits you when you retire.
• You can increase your retirement income beyond your state pension.
• You can watch your money grow more than it would in a cash ISA, for example,
    as your pension pot is spread across a range of investments.
• You can be comfortable in the knowledge that Nest was set up and is regulated by the    government.
• You can make a small change now that could make a huge difference to your life in the  future.

Whatever your other financial commitments or other ways of saving, a workplace pension can fit perfectly with your set-up. It doesn’t need to replace what you are currently doing but instead can work seamlessly alongside. A lot of people don’t even notice the difference when they incorporate a workplace pension, especially if they have just started work for a new employer.

There’s no need to worry if you feel like you can’t afford to pay into a workplace pension, you’re concerned about balancing it with your mortgage/s or even if you have debt. You don’t need to pay in huge amounts of money unless you want to, and to start with you don’t even need to make any decisions on how much you save. But it is worth considering that putting aside a regular amount, however small or large over your working life, can make a dramatic difference when you retire.

Some decide to overlook workplace pensions, choosing instead to prepare for later life through property or other investments. These strategies might work for some, but compared to a workplace pension, you miss out on the extra contributions from your employer and they can be risky, complicated and require substantially more effort to manage. Workplace pensions offer a low effort way of ensuring a comfortable pension pot for when you retire.