Is my workplace pension any good?
Workplace pensions under Auto Enrolment are a great way to save for retirement, as you can benefit from employer contributions and tax relief.
However, not all schemes are created equal. Some are better than others regarding fees, investment choices, and other features.
A workplace pension is a way of saving for your retirement that your Employer arranges.
Some are called ‘occupational’, ‘works’, ‘company’ or ‘work-based’ pensions.
Here are some things to consider when evaluating your Auto Enrolment Employer Scheme:
Workplace pensions can charge a variety of fees, such as annual management charges, fund charges, transaction fees and even fees on contributions, so not all your contributions are being invested.
It is important to compare the costs of your scheme to those of other pension providers. You can find this information in your pension scheme’s annual report.
Workplace pensions typically offer a range of investment fund choices, such as stocks, bonds, and property.
It is important to choose investment options that are appropriate for your risk tolerance and investment goals. You can learn more about the investment options in your penscheme’seme’s annual report.
Some schemes offer additional features, such as fund switches and the ability to make additional contributions via salary or your bank account and transfer your pension to another provider. It is important to consider these features when evaluating your workplace pension.
How to compare workplace pensions
There are a few different ways to compare workplace pensions. You can use a pension comparison website like the MoneyHelper or Pension Finder or contact different pension providers to get quotes.
It’s important to remember that you may not have much choice over the scheme provided, as it will be the scheme that your Employer chose when auto-enrolment rules came into place.
But the idea of reviewing is to make you more informed and give you more choices over contributions and funds available.
When comparing schemes, be sure to consider the following factors:
- Investment choices
- Other features
- Employer contributions
- Tax relief
Most UK employers are required to contribute to their employees’ workplace pensions. The minimum employer contribution is 3% of your salary, but some employers may pay more.
So, although most auto-enrolment workplace schemes are cheap and cheerful to encourage mass enrolment, it is essential to remember that employee contribution is a great benefit and should not be given up easily.
If you are considering additional contributions, you can still do that through your own individual pension and keep employer contributions to your workplace scheme.
You can get tax relief on your workplace pension contributions, which can reduce the amount of income tax you pay. The amount of tax relief you get depends on your income tax rate.
Whether or not your workplace pension is good depends on several factors, such as the fees, investment choices, and other features it offers.
It is important to review your plan regularly to ensure that you are getting the best deal possible and can plan for your retirement.
Contact us today if you want help reviewing your scheme and options.