Your employers’ pension is a great way to save for your retirement and you are likely to gain a great deal more by using this opportunity than opting out. Here are a few reasons why:

  • Starting early

At any age saving money will always be of secondary importance to getting those current bills paid. Hence, contributing to a savings pot for the distant future – such as your retirement – can all too easily be put on hold or just forgotten. Opting-in to your employer’s pension ensures you are saving as you work and saving early.

  • Free Cash

When you opt-in to your employers’ pension, 5% of your salary will go towards contributions (this includes 1% tax relief from the government). On top of that your employer will pay a minimum of 3%. So it is almost like getting free money towards your future savings!

  • No hassle

The world of pensions can be complex to say the least. Opting-in takes all the hassle away from choosing, processing and contributing to a pension. Your employer will have decided on the pension provider and the type of fund, the contribution is taken out at source and so you can just sit back and watch your money grow.

  • Less temptations to curtail savings

As your pension contributions have been taken out at source, you needn’t deliberate on how much of your salary will have to go on essential retirement savings. It has been done for you. The temptation to curtail your contributions are therefore less.

Streamlining your pension pot

However, as good as all this seems, it is recommended that you take an active part in guiding how your pension fund will grow. Your employer’s pension is unlikely to be tailored to your unique future requirements. As the amount taken out of your salary is a set percentage, it may be too low or too high based on your income or future requirements. Also, the performance of the pension needs to be taken into account. When it is performing well you may want to increase your contributions – and vice versa when investments take a dive. Indeed if performance proves to be bad you may want to transfer your money.

In other words, unless you understand how your fund is basically structured, its benefits and the likely financial rewards, it makes it difficult to monitor it and make changes where appropriate. The pension provider will forward updates of fund performance regularly – so this is something to watch out for. If you wish to make changes you can approach the provider directly or via human resources.

Changes could be:

  • Increasing or decreasing contributions
  • Adding or changing a beneficiary
  • Transferring monies in/out of the fund depending on its performance
  • Accessing the fund at 55 (this is Pension Freedoms – it is highly recommended that you only do this under the guidance of a regulated financial adviser as this can leave you a lot worse off in retirement).
  • Opting-out of the pension

You may also want to set up another personal pension fund which is active alongside your occupational pension. In order to make an informed decision as to which provider or fund to go with, you can visit such websites guidance websites or seek the support of a regulated financial adviser.

Finally, in modern times we are likely to have many jobs in any one career. It is therefore essential to keep a track of any occupational funds you have paid into. You may not still be contributing to a specific fund, but the money you have saved is still yours. Don’t lose it. If you are unsure about which occupational pensions you have, you can check this using the governments pension tracing service.

If you are looking at options for your pension, consider using a regulated pensions specialist like Portafina or, view the info at Pension Wise.