Employers are required to automatically enrol their employees in a workplace pension, but you retain the right to opt-out. So why should you still take up your company pension?

The benefits of a company pension

As people continue to live longer, saving for retirement is more important than ever. By taking advantage of a workplace pension, you get:

  • Simplicity – Your pension is set up by the company and contributions are made directly from your pay without you ever needing to do a thing. Without putting in any effort or creating complex plans, you can begin creating financial stability for your retirement.
  • Employer contributions – In addition to requiring auto-enrolment of eligible employees into a pension scheme, employers also have to match a certain percentage of your contributions. This means more money in your retirement pocket.
  • Tax relief – You won’t be taxed on your pension contributions, so the amount you put into your pension will actually result in a smaller amount leaving your paycheque. This makes it a very tax efficient way to save. Additionally, these savings can grow free from Capital Gains Tax.
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More on why you should consider taking up your company pension

Today, people live for decades after they stop working, giving them much more time to do the things they were too busy to do before. But having enough time is only part of the story – without enough money, not only might you lose out on happy retirement, you might be left struggling to pay your bills.

The current government pension is unlikely to give you the aspirational quality of life you would like to have when you stop working. The money you will receive from that (assuming you are fully eligible for it) is less than the UK poverty line. Taking that into consideration, it’s important to consider what else you can do to provide for your financial future. One of the easiest ways to start is to take advantage of your company pension.

By paying into a company pension, you can end up gaining significantly more than what you put it. The amount collected from your pay for your employee contribution is only a part of what goes into it. Not only does the tax you would normally pay on your income get credited back to your payslip, but you can also grow these savings confident in the knowledge they are free from Capital Gains Tax.

In addition to the tax relief you receive from saving into your workplace pension, you can also gain mandatory contributions from your employer. When you contribute to your company pension, your employer is usually required to contribute a certain percentage too. Some businesses contribute more on top of the minimum requirement as well. This benefit of taking up your company pension means that you will get additional money on top of your salary from your employer.

The money that is put into your pension is then invested to help it grow beyond just the amount that you and your employer put into it.

Finally, paying into your company pension is simple. With the state of the national pension as it is, having a stable and enjoyable retirement means saving and contributing throughout your working life. Although putting money aside into regular savings pots is one method of preparation, using your company pension to save for retirement is often more efficient and provides opportunity for greater growth.

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