Workplace Pensions

By Rob Binns | Senior Writer | Updated: 6 November 2019

Workplace pensions, sometimes referred to as company pensions, are a way for employees to save for their retirement by contributing to a scheme constructed by their employer. They work by taking a percentage of income from each salary. Under new laws these schemes are automatically set up for all eligible employees.


Your employer must provide a workplace pension scheme and you will have to opt out if you do not wish to contribute. You are eligible if you are over the age of 22, work within the United Kingdom and earn in excess of £10,000 per year.


The pension itself has three contributors, yourself, your employer and the government. You are entitled to tax relief if you pay income tax but should you not, depending on the scheme itself, you may still be eligible for financial assistance.

The value of each payment from each source will depend on a number of factors, including:

  • The design of the pension itself
  • Salary
  • Whether you are automatically enrolled or you have a separate pension scheme
  • Tax brackets

Each payment is typically worked out on a percentage basis and will depend whether the scheme is workplace defined or standard. Most workplace defined pension schemes require higher contributions than standard structured workplace pensions.

You may pay more into the scheme than is recommended and, as long as your employer agrees to contribute the difference, less for others.


All pensions define the minimum age at which they can be accessed and are typically first made available between 60 and 65 years of age. Depending on the small print of the scheme, some may even make payments available at 55, but this will reduce the value of the payments you receive.

Pros and cons

The obvious drawback of contributing to a workplace pension is reduced income. This can be significant depending on the scheme your employer has put in place. What’s more, because your workplace designs and puts in the place the scheme, you have little or no influence over it.

However, as previously mentioned, there are a number of ways in which you can access financial help, including tax breaks, income related benefits and even reductions on student loans if you have them, so most will not see a marked change in their income.

The main benefit of the workplace pension scheme is of course securing your financial future well into your retirement years in an affordable and sustainable way.

Rob Binns Expert Market
Rob Binns Senior Writer

Rob writes mainly about the payments industry, but also brings to the table industry-specific knowledge of CRM software, business loans, fulfilment, and invoice finance. When not exasperating his editor with bad puns, he can be found relaxing in a sunny (socially-distanced) corner, with a beer and a battered copy of Dostoevsky.

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