Company Pensions

Guide to understanding the new pension rules

A company pension – sometimes referred to as a workplace pension – is a way of saving for your retirement through a scheme arranged by your employer. The benefit of a company pension for a worker is that their employer contributes to their retirement savings. For employers they offer the chance to attract and retain the best staff, as they often feature as part of competitive remuneration packages.

Auto-enrolment pension schemes

Auto-enrolment is a Government initiative to ensure that all UK employees save into a pension scheme that their employer also contributes to.

By 2018, all employers will be legally required to enrol their eligible employees into a suitable workplace scheme. For more information about our auto-enrolment services, please click here.

Occupational and defined pension schemes

Occupational pension schemes are traditionally very secure because they are linked to an employee’s salary and years of service. However, an increasing number of employers now prefer to use defined pension contribution schemes instead, because they are more cost-effective. Defined schemes limit an employer’s overall level of financial contribution.

Additional Voluntary Contributions (AVCs)

Anyone who is currently a member of an occupational pension scheme through their employment can also boost their pension by making contributions to an AVC scheme. This can be linked to the main scheme or it can be separate in order to allow the employee to choose a product provider of their choice. In April 2006, regulations were introduced that make it possible for employees to contribute to a personal pension as well as being members of an occupational plan.

Stakeholder Pensions

First introduced as part of the Welfare Reform and Pensions Act 1999, the rules for stakeholder pensions changed on 1st October 2012 and, as a result, employers no longer have to offer access to schemes of this type.

If an individual is already part of a stakeholder pension scheme that was arranged by their employer before 1st October 2012, the employer must continue to take and pay contributions from the worker’s wages until the employee either leaves the company, asks their employer to end their stakeholder pension or ceases the payment of regular contributions.