- Employer/Workplace Pensions
During my 13 year stay in the UK, all my employers have offered a work place pension of some sort. On my first job in the UK, I remember my friend asking me to contribute to a pension but my uneducated mind at the time, could not comprehend. As far as I was concerned I could save this and earn interest albeit little. I wish he had taken his time to explain OR I had read a lot about it.
When I finally decided to join the scheme 4 years later, I was told because of my residential status (on work permit) I was ineligible to apply for the UK workplace pension scheme. I was however enrolled in an international Staff Retirement Plan – contributions to this account was made after tax to a Zurich Fund based in Guernsey. I have later read and found out this pension can easily be transferred and my plan is to transfer into a SIPP or combine with the subsequent pension I had when I became a UK resident. I need to get this done before 2021; I have 6 years from leaving employment to transfer.
My current company now offers a final salary (or a defined benefit) pension scheme. To be honest, this confuses me so much. My annual contributions towards my LTA is calculated differently from my annual savings limit. Pls do not ask me. What I know is that, based on all the TUPE processes etc, and changes to the lower earnings limit, I am better off leaving the company soon to keep my current salary.
And when I do leave, I will not be transferring it but keeping it intact unless something weird happens. My current pension should I leave in October of this year stands at an 8th of my current monthly salary
My other pensions are defined contribution and have the option for me to choose the funds my money is invested in; the DB scheme does not have this option. My company also offers an AVC (additional voluntary contribution) also paid in before tax, therefore, tax relief, however, looking at the fund options and the management fees, they do not offer much choice
In conclusion, I consider my workplace pension as a good wealth building tool. My employer’s contribution to it, no matter the amount ,is free money. I make sure, wheer I have the option to, it is invested in funds I understand and have proven, based on data for a long period to provide good results.