Workplace Pensions FAQs

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Workplace Pensions FAQs by Mind Map: Workplace Pensions  FAQs

1. Employees

1.1. What is a Workplace Pension?

1.1.1. A Workplace Pension is when employers arrange a pension to provide their employees with when they retire. The money collected for retirement is deducted from their wages.

1.2. Why choose a Workplace Pension?

1.2.1. Most people get a State Pension from the government that covers basic needs. The minimum full basic State Pension is £151.25 per week and the actual amount will be set in autumn 2015. This is why joining a workplace pension scheme is a good idea to save extra money in a pension fund, giving you a decent standard of living. Most employers now offer access to a pension at work to save for your retirement.

1.3. Who will pay into my pension?

1.3.1. You will and, in some cases, your employer will contribute as well. Most people get a contribution from the government in the form of tax relief. This means that some of your money that will have gone to the government as a tax, goes into your pension fund

1.4. What if I leave my job?

1.4.1. What will happen to my pension if I leave my job?

1.4.1.1. You may be automatically enrolled into a new workplace pension. This depends on the size of your employer and if you meet certain criteria for AE.

1.4.2. What will happen to my pension when I retire?

1.4.2.1. There are a number of different ways to create a retirement plan which suits you best, depending on the type of pension you have, your savings, and life expectancy.

1.4.2.1.1. CONTACT US TO GET MORE INFO

1.4.3. How much will I get from my workplace pension when I retire?

1.4.3.1. To get an idea of how much you will get from your workplace pension, you can ask for a "pension estimate" from us. We also have an online calculator that can help you work out the income you may get when you retire.

1.4.3.2. CLICK IN THE ONLINE PENSION CALCULATOR

1.4.4. What will happen to my pension if I die before retiring?

1.4.4.1. That depends on the type of the pension scheme you join. Contact us to find out whether you can nominate someone to receive the money if you die and how much money they will get.

1.4.5. What if I leave my job to become self-employed or stop working?

1.4.5.1. You should think about what income you will have to live on for the future. Even when your employer stops paying into your workplace pension scheme, you might be able to continue contributing, if you would like to do so.

1.4.5.1.1. CONTACT US FOR MORE INFO

1.5. What if it's not my fault?

1.5.1. What if my employer does not automatically enrol me?

1.5.1.1. This will be because your employer is not yet required to do so or you don't meet the criteria for AE.

1.5.1.1.1. SEE THE AE CRITERIA HERE

1.5.2. What if I don't meet the criteria to be enrolled?

1.5.2.1. You will not be automatically enrolled into a workplace pension. However, you may be able to joint other pension schemes if you want. Your employer will let you know, as long as you are aged between 16 and 75.

1.5.3. Could I lose my pension if my employer goes bust?

1.5.3.1. In case your employer goes bust we will look after your pension.

1.5.3.1.1. CONTACT US FOR MORE INFO

1.6. Can I take the money out from my pension pot?

1.6.1. Most people can't take money out from any pension scheme until they are 55, at least. The exact age you get your pension depends on the rules of the scheme.

1.6.1.1. CONTACT US TO FIND OUT

1.7. What if it's too early for me?

1.7.1. It may seem early to plan for your retirement, but the younger you are when you join a pension scheme the better it is. The money has more time to grow, even if it's only a small amount.

1.8. What if it's too late for me?

1.8.1. There is still time to put some money aside for your pension. Being in a workplace pension scheme means you are not the only one putting money in. Your employer has to contribute too.

1.9. Are Workplace Pensions safe?

1.9.1. No savings, including pensions, are ever entirely risk-free. However, the UK government has put an increased number of controls in place to minimise risks. This means your money is better protected than in the past.

1.10. Can I combine a workplace pension with a personal pension scheme?

1.10.1. You may be able to combine a workplace pension with a personal one, so you could choose to continue paying in both. It always depends on what you can afford and what both schemes are offering. With your workplace pension you will receive a contribution from your employer that you wouldn't get with your own personal scheme. However, your personal scheme may have a guarantee on future income.

2. Employers

2.1. What is a Workplace Pension Scheme?

2.1.1. A Workplace Pension Scheme is a way of saving for retirement through contributions deducted directly from your employees' wages. A scheme is also known as "pension pot"

2.2. What types of Workplace Pension Schemes are there?

2.2.1. There are two types: 1) Occupational pensions and 2) Group personal pensions and stakeholder pensions.

2.3. What are the Occupational pensions really for?

2.3.1. There are two types: 1) Final Salary or Defined Benefit Schemes (DB) and 2) Money Purchase Schemes or Defined Contributions Schemes (DC).

2.3.2. What's the difference between a DB or a DC pension scheme?

2.3.2.1. A DB is linked to your employees' salaries while they are working, so it automatically increases as their pay rises. Their pension is based on their pay at retirement and the number of the years they have been in the scheme.

2.3.2.2. A DC is where you choose a pension provider to invest the money you staff pays into this scheme. The pension provider usually takes a small percentage of the pension pot as a management fee. The pension is based on the amount of money paid in a on on how the investments are performing. As an employer you do not make any contribution to this scheme, unless you offer automatic enrolment into a workplace pension, in which you are obliged to make contributions.

2.4. Why choose a DB or or a DC Scheme for your staff?

2.4.1. DB is a good option for your staff and in most cases you make contributions to the pension fund. However, this scheme becomes less common for employers.

2.4.2. In DC schemes you may not make contributions, unless you offer AE into the scheme, which is a great option for your staff.

2.5. Are there any other benefits under DB and DC Workplace Pensions?

2.5.1. Life Insurance, which pays a lump sum or pension to your staff or their dependents if they die while still employed.

2.5.2. A pension if your employees retire early because of ill-health

2.5.3. Pension for employees' spouses, civil partners and other dependents when they die.

2.6. What are the Group Personal Pensions and Stakeholder Pensions really for?

2.6.1. You will choose a pension provider for this kind of workplace pension scheme, but your staff will keep an individual contract with the pension provider.

2.7. Why choose a Group Personal Pension over another Workplace Pension Scheme?

2.7.1. If you have non-eligible workers to be automatically enrolled into a workplace pension.

2.7.1.1. Workers aged between 16 and 74

2.7.1.1.1. Workers aged between 16 and 21 or between State Pension Age and 74

2.7.1.2. Working or ordinarily work in the UK under their contract

2.7.1.3. Have qualifying earnings payable by the employer in the relevant pay reference period but below the earnings trigger for AE.

2.7.1.3.1. Have qualifying earning earnings payable by the employer in the relevant pay reference period but above the earnings trigger for AE.

2.7.2. If you have self-employed people that work for you

2.8. What's the difference between Group Personal Pension and Stakeholder Schemes?

2.8.1. They both work in similar ways. The only difference is how the money is invested into the pension fund.

2.9. Are there any other benefits under Group Personal Pension Schemes?

2.9.1. An income during retirement, which can start from age 55

2.9.2. A tax-free lump sum payable, if you die before retirement to your dependents

2.9.3. A pension payable to your widow, civil partner or any other dependents

2.10. What rules apply for Stakeholder Schemes?

2.10.1. The pension provider can't charge more than 1.5% of the fund's value for the first 10 years and 1% for administering the pension.

2.10.2. The minimum contributions is set at £20 per months, although your employees can pay more into their fund.

2.10.3. Individuals are free to make their own choice on how they wish to make payments into their funds. They can't be forced to pay in regularly.

2.10.4. There are no penalties for missing or stopping penalties.

2.10.5. They can switch to another stakeholder scheme or another workplace pension scheme at any time without penalty.

2.11. Choose a Group Personal Pension or a Stakeholder Scheme?

2.11.1. If you employ working groups that need more flexibility on when and how much they contribute into their pension fund, consider the Stakeholder Scheme.

2.12. Is everyone being enrolled into a workplace pension?

2.12.1. Starting from October 2012, every employer has to enrol into a workplace pension workers who:

2.12.1.1. are not already in a qualifying workplace pension scheme

2.12.1.2. are aged 22 or over

2.12.1.3. are under the State Pension Age (the earliest age a person can claim state pension)

2.12.1.4. earn more than £10,000 per year

2.12.1.5. work in the UK