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If you have been auto-enrolled or have self-enrolled into a workplace pension and are unsure of what that means for you, then you’ve come to the right place. On this page we’ll answer some of the key questions you may have so you have all the information you’ll need.
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.
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.
The combination of personal contributions, employer contributions, tax relief and compound interest add up over time. This means that the longer you have money in a workplace pension, even if it’s just small amounts over time, the larger the fund you’ll have to enjoy when you retire.
Last updated: 08/20