Broadly speaking most people’s pensions come from one of the following, a company pension plan, a personal pension plan and / or the State pension.

What are your rights with each pension scheme?

The State Pension

Your State Pension is a monthly payment from the government based on your National Insurance contributions (NIC). It is intended to ensure that all workers have a foundation for their retirement to support them financially in their later years. You can receive it when you reach the State Pension age. From October 2020, the State Pension age for both men is 65 years and women is gradually rising from 60 to 65 years.

If you work past State Pension age, you can claim State Pension while you keep working. The money you earn and the hours you work will not affect your State Pension, but you may pay tax on your State Pension as well as the money you earn. You can also put off your claim to State Pension to earn extra State Pension or a lump sum. You may be able to keep working with the same employer while they are paying you an occupational pension.

A Company Pension

A state pension can help cover your basic needs in retirement, but a workplace pension scheme can help make your life more enjoyable with some extra finance. Most employers offer workplace pension schemes, and you should be automatically enrolled in one if:

• You are aged over 22
• You are under State Pension age
• you earn more than £10,000 a year
• you are not already in a workplace pension scheme
• you work in the UK.

If you get another job elsewhere, you can either leave the pension in your old employer’s scheme and access it once you reach the scheme’s pension age or, transfer money to your new workplace pension scheme. However, this isn’t possible for all schemes, so it is best to talk to your pension provider or an independent financial adviser about your options.

You can usually nominate someone, such as your spouse, family, or friends, who will then receive your pension pot if you pass away before reaching your scheme’s pension age. You will need to put this in writing and can change your nomination. Check the rules with your pension scheme in the workplace.

Saving into a workplace pension will not affect your entitlement to the State Pension. 

A Personal Pension

Personal pensions are pensions that you arrange yourself. The money you pay into a personal pension is put into investments (such as shares) by the pension provider and the money you will receive usually depends on how much has been paid in, how the funds investments have performed and how you decide to take your money.

Personal pensions are provided by insurance companies, often through banks and building societies, and sometimes through your workplace.

If your employer offers a pension scheme, check whether it’s a personal pension or an occupational pension scheme. It is worth noting that they are not the same thing and the benefits you get at the end will be different.

As a personal pension holder, you have the right to manage your pension. You can make regular or individual payments into your pension, and you’ll receive statements telling you how much your pension is worth. 

Personal pension holders have a right to transfer their pension, but you need to legally consult a financial advisor if the transfer is over £30,000.

If you have any questions or queries about your rights or pension entitlement you can get in touch with our legal specialist who is on hand to help. 

Related blog: State Pension Information & Entitlements