Workplace Pension

What is a workplace pension?

A workplace pension is a pension arranged by your employer. Money comes out of your salary before you get paid, your employer adds their own contribution on top, and the government adds tax relief.

How much goes in?

By law, the minimum is 8% of your qualifying earnings—you pay 5%, your employer pays 3%. Many employers pay more than the minimum.

If you earn £30,000, that’s roughly £2,400 per year going into your pension, with only £1,200 coming from your take-home pay.

Do you have to join?

Your employer must enrol you automatically if you’re eligible—this is called auto-enrolment. You can opt out, but you’d lose the employer contribution. That’s free money you’re turning down.

What type of pension is it?

Most workplace pensions are defined contribution—you and your employer pay in, it gets invested, and what you get at retirement depends on how much is in the pot.

Some older schemes are defined benefit, which guarantee a specific income in retirement. These are now rare in the private sector.

Can you also have a personal pension?

Yes. A workplace pension doesn’t stop you having a SIPP or other personal pension too. Your annual allowance covers contributions to all your pensions combined.

Key points

• Employer contributes too – free money on top of your salary
• Auto-enrolled by default – you can opt out but lose employer contribution
• Minimum 8% total – 5% from you, 3% from employer
• Usually defined contribution – your pot depends on contributions and growth