New UK pension scheme explained: thanks to recent pension reform legislation, millions of UK workers now or soon will have the legal right to participate in a workplace pension scheme. The new auto-enrolment requirement was applied to the largest UK companies in October 2012, and smaller companies will be progressively folded in between now and February 2018.
What is a pension scheme in the UK?
A pension scheme is a retirement savings plan. It works like this: a percentage of an employee’s pay is automatically diverted into the pension scheme every payday. Typically the employer and the UK government also add money into the pension scheme. This money is invested in financial markets. It is designed to provide UK employees with a post-retirement income.
Who needs it?
With luck you will live to retirement, and maybe even beyond. The UK government provides a State Pension to UK workers who reach State Pension age, currently topping out at a little over £100 per week. Unless you’re amazingly frugal (or independently wealthy), that’s probably not going to be enough to live well. So it’s safe to say that nearly everyone in the UK needs a company pension scheme.
Types of UK pension schemes
UK pensions come in many forms:
- Government (State) pensions
- Workplace (company) pensions
- Defined-benefit (final salary or Career Average Revalued Earnings (CARE) schemes
- Defined-contribution (money purchase) schemes
- Hybrid (defined benefit + defined-contribution) schemes
- Self-Invested Personal Pension (SIPP) schemes
- Executive Pension schemes
- Self-Employed Pension schemes
Read on to learn what’s new in UK company pension rules. And don’t hesitate to use the form on this page to get up to four free quotes within 48 hours from pension experts in your area. Your company’s pension scheme is vitally important, and deserves all the consideration you can gather.