Workplace Pension myth busters

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Automatic Enrolment into a workplace pension will make it easier for people to start saving for their retirement. By 2018, all employers will have been required to enrol their eligible workers into a workplace pension scheme if they are not already in one.

There is a lot of confusion surrounding pensions and saving. These pension myths can make people feel confused about what they need to do to fund their retirement. We’ve explained some common pension myths below.

It’s not worth saving into a pension

FALSE! Most people can expect to get back more in retirement than they put in their pension. Most people saving into a workplace pension also benefit from contributions from their employer and the government in the form of tax relief*.

*Tax relief means some of your money that would have gone to the government as income tax, goes into your workplace pension instead.

It’s going to be complicated

FALSE! You do not have to do anything to benefit from a workplace pension – over the coming years, all employees who meet the required criteria will in be automatically enrolled into a workplace pension.

My house will be my pension pot

BE CAREFUL! Property doesn’t allow you to spread your money across a range of different investments like a pension does, and doesn’t have the same tax advantages.

I can only pay in a small amount so it isn't worth it

FALSE! Your contribution to your workplace pension will be a percentage of your salary. You’re also likely to benefit from a contribution from your employer and may get tax relief* from the government too.

*Tax relief means some of your money that would have gone to the government as income tax, goes into your workplace pension instead.

I'm too old to start saving

FALSE! It is better to start early, but unless your retirement is a few months away, there’s still time for you to build up some money.

The State Pension will be enough

BE CAREFUL! The State Pension is a foundation, but for many people, relying on this alone could mean a fall in income upon retirement. Saving into a workplace pension means people will have more money to continue doing the things that they enjoy when they retire.

Retirement seems like a long way off – it’s too early to start saving

Although retirement might seem like a long way off, it’s never too early to start saving! Saving through a workplace pension is easy and you don’t actually have to do anything as your employer will enrol you. The earlier you start to save, the more money you will have when you come to retire as your money has time to grow.

If you want to find out more about being automatically enrolled into a workplace pension, visit our GOV.UK guide to find out more.

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