The Government’s auto-enrolment scheme means that all UK companies will have to offer a pension to their employees by 2018 and contribute to it on their behalf.
Recent changes have also meant that retirees can access all of their pension pot in one go.
Keeping your employees abreast of their pension rights, the pension you provide and any employee benefits you offer, is not only a good thing to do for internal PR purposes (and helps to keep them in the company longer!)…..it is also your duty as an employer.
1) How much will I get from my workplace pension when I retire?
It is difficult for any of us to know exactly how much money we need to put into a pension in readiness for retirement. When we are in our 20s and 30s, other priorities take place like paying off student debts, getting a job, buying a house, starting a family. Online tools and calculators can help but it’s always best to seek advice from a professional who can take into consideration your current circumstances and work out a plan of how much you’d like to live on in retirement.
2) When can I take my money out?
Usually, employees can’t access their pension pot until they are aged at least 55. Some professions however allow retirement at a younger age. Other factors can also enforce early retirement and early access to pension pots such as ill health.
Recent changes at the beginning of April means that employees can withdraw all of their money but there are tax implications that they need to be aware of as well as ensuring they don’t spend it all in one go and leave nothing to fund their retirement- ongoing living expenses.
3) What happens to my pension if I move jobs?
Your employees can join another workplace pension scheme if they get a new job. They may be able to combine their old pension with a new one, or continue making contributions to the old pension scheme. Often not combining them is better as they may lose out. Again as noted earlier, it is better to seek the advice of the HR department, pension provider or a financial planner who has the expertise and knowledge of what the best options are.
The Government’s Pension Tracing Service. can help with individuals who have lost track of any of their pensions.
4) Will changes in my personal circumstances affect my pension?
If an employee dies before taking out their pension, a lump sum will usually be paid to the person named as beneficiary.
Should their personal circumstances change, for example they get divorced, heir pension is taken into consideration in the settlement, and could be split into two separate pots.
Should they become ill and have to give up work as a result, they might be able to take their benefits early, but this depends on the scheme they’re in.
5) Could I lose my pension if the company goes bust?
If your company has a defined contribution pension scheme, the pension pot is usually looked after by a pension provider. If you were to go bust therefore, you can reassure your employees that they won’t lose their pension pots.
If you run a defined benefit pension scheme your employees are protected by the Pension Protection Fund if you go under.
This article is for information only and does not constitute financial advice. Please contact your usual adviser at CST Wealth Management Ltd if you have any questions relating to your own personal circumstances or if you would like to make an appointment to discuss your financial plan. Contact details can be found on our Meet the Team page or by contacting us via email@example.com or 01656 867167.
The Financial Conduct Authority does not regulate tax advice.
CST Wealth is the trading name of CST Wealth Management Ltd which is authorised and regulated by the Financial Conduct Authority.