Group Personal Pensions
Some employers make a personal pension available to their staff through a group arrangement. If your employer offers a group personal pension scheme, you should seriously consider joining it, especially if your employer makes contributions as well.
With a group personal pension deductions are paid from your salary to the provider. Your money is then invested by the pension provider to give you benefits at retirement. Just remember the value of your fund may go down as well as up and you may not get back what you put in.
If you don't join your employer's group personal pension scheme you could miss out on any contributions your employer may also make, and possible reduction in charges. If you need more information you should check with your employer.
Group Stakeholder pension
A group Stakeholder pension is a collection of Stakeholder plans arranged by an employer for its employees in the same way a group personal pension is.
Contributions from your employer
In some group personal pension schemes your employer would normally, at least, match your contributions. If for example you were to pay in £100 per month (including tax relief, subject to government limits), your employer would contribute £100 too.
Matching your contributions in this way will depend on the plan rules, and if they do match what you pay in, they may only contribute up to a certain percentage of your salary.
By paying into your company pension you could be taking advantage of their contributions.
What difference could it make?
For example as a basic rate tax payer if you contributed £80 per month, the taxman would add £20 in tax relief, and assuming your employer matched your contribution, they would also pay £100. Over 20 years, this could mean your employer pays £24,000, giving you a pension contributions total of £48,000, or even more. Broken down, this means you'd contribute £19,200; the taxman would contribute £4,800; and your employer would contribute £24,000.
Other benefits of a Group Personal pension
- Group Personal pensions and Group Stakeholder pensions offer the same features and tax benefits as an individual Personal pensions or Stakeholder pensions.
- One difference though is that your employer may be able to negotiate better terms from the provider, such as lower charges than you might get if you arranged your own Personal pension.
- Group Personal pensions also generally offer a broader range of investments than Stakeholder pension schemes.
Even though they are offered through your employer, group personal pensions are personal pension schemes, and this means you have an individual contract directly with the provider.
This is for illustration only and is based on our current understanding of current tax legislation and HM Revenue & Customs practice both of which may change without notice. The impact of taxation (and any relief, subject to government limits) depends on individual circumstances.
Why do I need a pension?
A pension is designed to help you fund your retirement and replace the income you are no longer receiving from working.
Tax benefits of saving in a pension
Saving in a pension is a tax-efficient way of building up an income for retirement.