Your Pension

If you are an employee, a pension is a way of saving money to provide you with an income when you retire. 

When people talk about their pension, they can mean either the way they are saving for their retirement, or the income they will receive when they have retired.

In our FAQs we also use 'pension scheme' and 'pension pot' to describe the way you save for your retirement. Other names you may come across are 'pension plan', 'pension policy' and 'retirement pot'. 

Income you receive when you retire is sometimes called 'retirement income.'

All Questions
Are pensions safe?

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

  • The Pensions Regulator regulates workplace pensions.
  • www.thepensionregulator.gov.uk
  • The Financial Conduct Authority regulates the providers of personal pensions.
  • www.fsa.gov.uk

There's no perfect answer as to where to put your money for later life. Each type of saving and investment works differently and has its own pros and cons. But, for most people, it's advisable to prepare and, invest some money for the future, such as pay in to a workplace pension scheme, than to do nothing.

Two types of workplace pension

There are two main types of workplace pension schemes:

1. Defined Contribution schemes. Your pension pot is put into various types of investment, such as shares (shares are a stake in a company). The amount you get at retirement is based on how much is paid in and how well the investments have performed. Normally, when you retire, you take some of your pension pot as a tax-free cash lump sum. You use the rest to buy yourself an income, on which you might pay tax.
These are also known as 'money purchase' schemes.

2. Defined Benefit schemes. The amount you get at retirement is based on various factors. These could include how long you have been a member of the pension scheme and your earnings. Examples include 'final salary' or 'career average' earnings related pension schemes. Normally when you retire you take some of your pension as a tax-free cash lump sum. The rest you get as a regular income, on which you might pay tax. Sprite does not operate a Defined Benefit scheme.

The first of these types is more common and is what NEST, the Sprite pension provider, will be offering. To find out more about your pension scheme while employed through Sprite, please contact NEST.

Can I take the money out of my pension?

At present, most people can't take money from any pension scheme until they are aged at least 55.

How much will I receive from my workplace pension when I retire?

It's possible to get an idea of how much you will get from your workplace pension by getting a 'pension estimate' (also sometimes known as a 'pension projection'). You will be able to obtain this information from our pension scheme provider, NEST (National Employment Savings Trust).

NEST have an online calculator that can help you work out the income you may get when you retire.

I had a workplace pension in a previous job, what should I do about that?

You could leave it where it is. You will get it when you retire, so long as you were in the pension scheme long enough. The length of time needed will be in the pension scheme rules. Or you might be able to combine it with your new workplace pension. If you're considering doing this, you need to check with your current pension provider that it's possible and, if it is, how to go about doing it.

If you need help with your pension options, The Pensions Advisory Service might be a good starting point.
Website: www.pensionsadvisoryservice.org.uk

If you have lost track of a pension, the government’s Pension Tracing Service could help provide you with the contact details for that pension.
Website: www.direct.gov.uk/pensiontracing

I meet the criteria - when will I be enrolled?

If you meet the criteria, the timing of when you will be enrolled into a workplace pension depends on the size of your employer. Very large employers began doing it first, in late 2012 and early 2013. Other employers have begun to follow sometime after this, and will continue over several years. The staging date for Sprite Technical Services UK LLP was October 1st, 2015.

I want to know more about workplace pensions. Can the value go down as well as up?

With Defined Contribution workplace pensions, your pension pot is put into various types of investment, such as shares (shares are a stake in a company).

Your pension pot is invested in this way because in the long run it usually gives a better return than a savings account. Over the years, the value of investments can go up and down. But even if the value goes down in the short term, it is likely to recover in the long term.

As you approach retirement, you may be asked if you want your pension pot moving in to investments less likely to reduce in value in the short-term - this is called life styling. Some pension schemes do this automatically. You can check with whomever runs your pension if this applies to your scheme.

I want to know more about workplace pensions. Could I lose my pension if my employer ceases trading?

As the NEST scheme is a defined contribution workplace pension, you won't lose your pension pot if your employer ceases trading.

If the pension provider (in this case NEST) cannot pay, there are a number of organisations who might be able to help. For example, if the provider is authorised by the Financial Conduct Authority, the Financial Services Compensation Scheme (FSCS) can provide compensation. This will generally be because the provider has stopped trading and/or is unable to pay its debts. You can find more information on the FSCS website.

If your pensions scheme is run by your employer (on a 'trust' basis)* and they go out of business, your pension pot might be smaller than it would have been. This is because, if your employer has been paying the pension scheme administration costs, they will no longer be doing so. These costs would now come from the scheme members' pension pots.

*This is known as a 'trust-based' defined contribution workplace pension scheme. The other type (run by a pension provider) is known as a 'contract-based' defined contribution workplace pension scheme. If you want to know which type of defined contribution pension scheme you are in, check with whoever runs your pension scheme.

I want to know more about workplace pensions. How is the money invested?

With a Defined Contribution workplace pension, the contributions you and your employer pay in, plus the contribution from the government in the form of tax relief*, go into your pension pot.

Your pension pot is put into various types of investment, such as shares (shares are a stake in a company). It is expected to grow over time.

Your pension pot is invested in this way because in the long run it usually gives a better return than a savings account.

*Tax relief means some of your money that would have gone to the government as tax, now goes into your pension pot instead.

With some workplace pension schemes, you may be able to make decisions about how your money is invested. But you don't have to – all pension providers have to offer a fund that meets the needs of most people and this is where your money will be automatically invested. Whoever runs your pension scheme will have more information on this.

The earlier you start putting money into your workplace pension, and the more you and your employer put in, the more money you're likely to have at the end.

I'm paying into a personal pension already, what should I do?

It’s possible to have both a workplace pension and your own personal pension, so you could choose to continue paying into both. Or you might choose to continue with just one of them. It depends on your circumstances - for example, what you can afford and what your personal and workplace pension schemes are offering. With your workplace pension, you will receive a contribution from your employer that you won't get with your own personal pension. The contribution by Sprite will be made from the income Sprite receives from your Agency. Your own personal pension may have a guarantee about future income.

If you're considering this question, the Pensions Advisory Service might be a good place to start. The Pensions Advisory Service is an independent voluntary organisation, providing free information about pensions.
Website: www.pensionsadvisoryservice.org.uk

Is everyone being enrolled into a workplace pension?

Pensions auto-enrolment started in October 2012 for very large employers, and since then every employer has had to enrol workers onto a workplace pension. This includes workers who:

  • Are aged 22 or over;
  • Are not already in a qualifying workplace pension scheme;
  • Earn more than a minimum amount a year (£5,824);
  • Are under State Pension age;
  • Work, or usually work, in the UK.
What happens to my pension if I die before I retire?

The rules vary depending on the type of scheme you are enroled with. NEST allows you to nominate an individual to receive the money should you die. This can be done online, and instructions will be sent to you within your welcome pack.

www.nestpensions.org.uk

What if I change jobs?

You may automatically be enrolled into a new workplace pension. This will depend on the size of your new employer when you move, and if you meet the criteria listed in question one. All employers now have to automatically enroll all new workers who met the criteria.

If your new employer has a workplace pension but doesn't automatically enroll you, they may give you the option of joining if you want.

If your new employer doesn't automatically enroll you, this will be because of one or both of the following reasons:

  • They are not yet required to do so;
  • You don't meet the criteria

If you join a new pension plan (either 'workplace' or 'personal'), you may be able to combine your old pension with your new one. Your new pension scheme provider will be able to tell you if this is possible and, if so, how to go about doing it.

You might be able to continue making contributions to your old pension scheme after you've left your job, if you wish. You would need to contact whoever runs your pension scheme to find out if this is possible, if there will be a cost involved, and if you will get tax relief.

If you can't or don't want to pursue either of these options, then what happens to your pension depends on the scheme rules. Check with whoever runs your pension scheme (NEST is running the Sprite pension scheme).

Nowadays, lots of people move jobs several times in their working lives, so it's important to keep track of the pensions you have. Keeping your statements will help you do this. If you have lost track of a pension, the government's Pension Tracing Service could help provide you with the contact details for that pension.
Website: www.direct.gov.uk/pensiontracing

What if I don't meet the enrolment criteria?

If you don't meet the criteria outlined in the section "Is everyone being enrolled into a workplace pension?" when Sprite starts enrolling workers, you will not be automatically enrolled into a workplace pension. However, you may be able to join the pension scheme if you want – if you're not already a member. We will provide you with details of this (so long as you're 16 or over, and under 75).

If you meet the criteria at a later date – for example when you turn 22, or you begin to earn more than £5,824 in 2017-18 and you are not already a registered – then Sprite will automatically enroll you.

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

You should think about what income you'll have available to live on in later life. Your employer will stop paying into your workplace pension, but you might be able to continue contributing if you wish. You would need to contact whoever runs your pension scheme to find out if this is possible, and if there will be a cost involved.

Alternatively, you might want to set up your own personal pension, or put other plans in place to give you an income when you retire.

What if I’m not sure it's for me? I can't afford it

For many people, paying into a workplace pension scheme is a good idea - even if they have other financial commitments, such as a mortgage or a loan. This is because you're not the only one putting money in. Your employer has to contribute too, provided you earn more than a certain amount a year (£5,824.00 a year in 2017-18). Sprite's contribution will be made from the income received from your agency.

Most people will also get a contribution from the government in the form of tax relief. This means some of your money that would have gone to the government as tax goes into your pension instead.

Over time, this money adds up and can grow.

But you should make sure you can afford to meet your other commitments. If you're behind on your mortgage, rent, credit card, or other debt payments then a pension might not be the right step at the moment. It's something you should come back to at a later date, once your debts are under control.

If you start saving into a workplace pension but then a few months or years later you want to stop paying, you can do so. You might want to check with whoever runs your pension scheme what happens when you stop paying, and how to re-join.

You can start paying into your employer's scheme again at a later date, if you decide you want to. Your employer has to accept you into their pension scheme once in every twelve month period. This means if you leave, join, then leave again within twelve months your employer does not have to accept you a second time. But they can choose to do so.

If you opt out or you stop making payments, your employer will automatically enrol you back into their pension at a later date. This is usually every three years. This is because your circumstances may have changed and it may be the right time for you to start saving. Sprite will contact you, and you can choose to stay in the workplace pension or opt out.

If you're struggling with debts and would like advice on how to manage your money, you might find the Money Advice Service a good starting point.

Website: www.moneyadviceservice.org.uk

Example (taken from DWP – Department for Work and Pensions):

Nicola, 34 and Paul, 38

Nicola: "When I first heard I was going to be put into a pension at work I thought 'how am I going to afford this on top of everything else?' We have enough demands on our money as it is and it only seems to be getting harder these days! I mean what with the cost of so many things going up…"

Paul: "and our salaries are staying the same. I mean none of us are getting any more money to cover these extra costs!"

Nicola: "But then a friend at work said they were going to stay in. They said the thought of having just the State Pension and nothing else, when they're old, had really made them think. They felt perhaps they should be doing something."

Paul: "So now we’re going to stay in and see how it goes."

What if I'm not sure it’s for me? It’s too late for me

Having a workplace pension is worth considering, even if you think you're too old. Unless your retirement is just a few weeks away, there's still time to build up some money.
Unlike other ways of saving, having a workplace pension means you're not the only one putting money in. Your employer has to contribute too, provided you earn more than a certain amount a year (£5,824.00 a year in 2017-18).

Most people will also get a contribution from the government in the form of tax relief. This means some of your money that would have gone to the government as tax goes into your pension instead.

If, when you retire, your pension savings are not more than a certain amount, you might be able to take it as a cash lump sum (instead of a regular income). To find out if this is possible, and if so, the amount and other rules, check with whoever runs your pension scheme.

Example (taken from DWP – Department for Work and Pensions):

Anne, age 54

"At first I couldn't see the point in contributing to a workplace pension at my age. I wasn't sure I would get much out of it. But now I think I'll stay in. I like the idea that I'm not the only one putting money in.

"I already put a bit into an ISA (Instant Savings Account) from time to time, but it's been at the back of my mind that I should be doing more for when I retire. I think being in the pension at work could be a good way to build up some more money. It's about 12 years before I get my State Pension, so I'll be working and saving into my pension for at least that time."

What if I'm not sure it's for me? I don't need to start saving for my pension yet.

It may seem early to start planning for later life, but remember – you could have 20 years of retirement, and you will need an income. A workplace pension is one way to provide that income. Usually, the younger you are when you start paying into a pension the better. The money has more time to grow.

So even if it's only a small amount, the money you put away early in life can build up over time.
Example (taken from DWP – Department for Work and Pensions):

James, 22

"I hadn't really thought about what I'll live on when I'm old. I suppose I just assumed you get something from the government. But now I've found out the basic State Pension is around £107 a week. I don’t know what my life will be like when I’m retired, but I’m sure I’ll want more than that.

“I was thinking of opting out of my work’s pension, as I’d rather have the money now. But if I want to have an income on top of the State Pension when I retire, perhaps I should stay in. I've also heard the younger you are when you start, the better. If the money comes out of my pay before I’ve even had it, after a while I don't think I'll notice it's gone."

Who will pay into my workplace pension?

You will pay in to it. As your employer, Sprite will also pay into it from the income we receive in respect of our invoice to the agency. We are required to do this if you earn more than a certain amount a year (£5,824.00 a year in 2017-18). Most people will also get a contribution from the government in the form of tax relief. This means that some of the money that would have gone to the government as tax goes into your pension instead.

'Workplace pension'

A workplace pension is when an employer arranges to provide their workers with a pension when they retire. It is sometimes called a 'company pension', an 'occupational pension' or a 'works pension'.

Why is auto enrolment happening?

The aim is to help more people have another income, on top of the State Pension, when they retire.
The State Pension is a foundation for your retirement. If you want to have more, you need to save during your working life. Otherwise, you may reach retirement facing a significant fall in your standard of living. The full basic State Pension in 2016/2017 is £122.30 a week for a single person.

The government is getting employers to automatically enroll their workers with a pension at work, so it is easier for people to start saving.

You can opt out if you want to, but if you stay in you will have your own pension – which you will receive when you retire.

Will it be enough?

Having a workplace pension means you've taken an important step towards giving yourself the lifestyle you would like in later life. You may want to start thinking about the things you will need money for in retirement, such as paying bills, transport, and buying food, and the things you may also want to do. Remember to consider:

  • Using and maintaining a car;
  • Meeting friends for lunch or drinks;
  • Buying gifts for your family or friends;
  • Going on days out or taking holidays;
  • Taking part in sport and leisure activities.

Once you have an estimate of how much you can expect to get from your workplace pension, you can think about whether it will be enough. The Gov.uk 'Your Future Wallet' tool, may be able to help you with this: www.gov.uk/workplace-pensions

If you're concerned you will not have enough, you could think about contributing more to your pension, working longer, or saving in other ways.

'Personal pension' (also known as 'private pensions')
It's possible for people to set up a 'personal pension' themselves directly with a pension provider. You arrange this yourself with the pension provider of your choice, and you pay into it. As this is not organised through Sprite, we would not contribute to it.

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