Understanding your pension: FAQs

It can be right for some people to combine all their pensions into one pot, but there’s a lot to think about. Most people have several pension pots over the course of their working lives, as they move from job to job, and it can be hard to keep track. They can even get lost - did you know that in the UK there are an estimated 3.3 million pension pots that are currently unclaimed or lost?*. Bringing your pensions together could simplify your retirement planning and may help you to save on costs and charges but there's a lot to consider. It’s important to weigh up the pros and cons as it may not be right for you.

Not sure where to start? We're here to help guide you through the process.

*Pensions Policy Institute, PPI Briefing Note Number 138, Lost Pensions 2024

Yes! Use the Government’s free service to find out how to trace your lost pensions.

How much you pay into your pension depends on your individual circumstances and the style of retirement you’re imagining. Your ‘Contributions explained’ document (which you can find in PlanViewer) explains how much your employer will contribute, and potentially how much they will match if you also pay into your pension. It’s generally a good idea to start paying into your pension as early as you can. Check out this calculator which shows you how even small contributions can make a big difference.

You decide who gets your pension if you pass away. You do this by ‘nominating a beneficiary’ and this is a really important step to take when setting up your pension. Your beneficiary can be more than one person. By telling us who you’d like to receive your pension, it means we can get your pension savings to the people you choose faster, should the worst happen. It’ll also give your loved ones one less thing to worry about at a difficult time.

Once you’ve nominated your beneficiary, make sure you keep their contact details up to date. Equally, if you change your mind or your circumstances change (for example, if you divorce), it’s important to let us know. Find out more.

A workplace pension is a way of setting money aside when you’re working so that you have money available when you retire. In a workplace pension, the money may come off your salary each month, and your employer probably contributes too. This money is invested. The aim is for the investments to grow over time so that when you are ready to stop working, you still have an income. You can currently usually access a workplace pension at age 55 and this is due to go up to 57 in 2028.

If you’re between 22 and the State Pension age and earn at least £10,000 a year working in the UK, it’s likely that you will be auto-enrolled into your workplace pension.

A big advantage of auto-enrolment, as its name suggests, is that you join your pension scheme automatically without having to do anything. Your money is automatically invested in a default investment strategy. When you're auto-enrolled, your employer is required to pay contributions into your pension pot. There is a minimum level they must meet, but some employers choose to add more. Find out more about auto-enrolment here.

If you're invested in the default investment strategy, it's likely that your pension is invested in a specific way with the aim to make it grow as much as possible. This means that when you’re young and early on in your career, its invested into higher risk funds because you can weather the ups and downs since you won’t be accessing the money anytime soon. But when you’re later on in your career and may need to start planning or even start accessing the money soon, it’s invested in lower risk funds. That’s all geared towards whatever retirement date you told us, so if it’s not accurate, the way your money is invested may not be right for you.

You decide who gets your pension if you pass away. You do this by ‘nominating a beneficiary’ and this is a really important step to take when setting up your pension. Your beneficiary can be more than one person. By telling us who you’d like to receive your pension, it means we can get your pension savings to the people you choose faster, should the worst happen. It’ll also give your loved ones one less thing to worry about at a difficult time.

Once you’ve nominated your beneficiary, make sure you keep their contact details up to date. Equally, if you change your mind or your circumstances change (for example, if you divorce), it’s important to let us know. Find out more.

The answer to this varies from person to person, but as a starting point we suggest that you should save 15% of your pre-tax income for retirement. That includes the contributions that your employer makes (as you know, they usually pay in monthly) and any amount that you contribute. Anything you pay monthly is taken from your salary, which makes it one of the easiest ways to save for retirement.

Why not take our quiz to help you see if you’re saving enough for the retirement you’re imagining?

How much you pay into your pension depends on your individual circumstances and the style of retirement you’re imagining. Your ‘Contributions explained’ document (which you can find in PlanViewer) explains how much your employer will contribute, and potentially how much they will match if you also pay into your pension. It’s generally a good idea to start paying into your pension as early as you can. Check out this calculator which shows you how even small contributions can make a big difference.

Your pension is an investment. The earlier you can start saving into your pension, the longer the investments will have to grow. You will also be more likely to benefit from compounding, which is when any investment growth you earn on your money is added to the amount you’ve invested, and that all then forms part of your investment for the next year. Remember though, that any growth is not guaranteed as the value of investments can go down as well as up, so you may get back less than you invest.

It can be right for some people to combine all their pensions into one pot, but there’s a lot to think about. Most people have several pension pots over the course of their working lives, as they move from job to job, and it can be hard to keep track. They can even get lost - did you know that in the UK there are an estimated 3.3 million pension pots that are currently unclaimed or lost?*. Bringing your pensions together could simplify your retirement planning and may help you to save on costs and charges but there's a lot to consider. It’s important to weigh up the pros and cons as it may not be right for you.

Not sure where to start? We're here to help guide you through the process.

*Pensions Policy Institute, PPI Briefing Note Number 138, Lost Pensions 2024

Yes! Use the Government’s free service to find out how to trace your lost pensions.

The amount of state pension you'll get in the UK depends on your National Insurance record. To get the full state pension, you need 35 qualifying years of National Insurance contributions (or national insurance credits from claiming certain benefits). The full state pension is currently £221.20 per week. If you have fewer than 35 qualifying years, your pension amount will be less. You can check your state pension forecast on the government's website to see how much you might get.

It’s usually possible to take money out of your pension after you turn 55 (this is due to change to 57 in 2028), and from this age you’ll probably be able to take 25% of your pot as tax-free cash.

There’s a great deal of flexibility about how you take an income from your pension savings. It’s a good idea to check out the pros and cons of the various options available to you, and see how they will each affect your lifestyle, the tax you pay and the amount you can pass on. Learn more about choosing your income options here.

If you're invested in the default investment strategy, it's likely that your pension is invested in a specific way with the aim to make it grow as much as possible. This means that when you’re young and early on in your career, its invested into higher risk funds because you can weather the ups and downs since you won’t be accessing the money anytime soon. But when you’re later on in your career and may need to start planning or even start accessing the money soon, it’s invested in lower risk funds. That’s all geared towards whatever retirement date you told us, so if it’s not accurate, the way your money is invested may not be right for you.