Understanding your pensions

Workplace Pensions

A workplace pension is a pension scheme arranged by your employer. Thanks to auto-enrolment rules, all employees are now automatically enrolled into a workplace pension if they:

• are aged between 22 and State Pension age
• earn at least £10,000 per year
• work in the UK.

Both you and your employer contribute to the scheme, and the government adds tax relief. The minimum total contribution is 8% of qualifying earnings, with at least 3% of this being contributed from your employer.

If you earn less than the threshold, you can still opt in voluntarily and your employer may still contribute to your pension, depending on your earnings.

Personal Pensions

A personal pension is one you set up yourself, sometimes with the help of a financial advisor. These are ideal for:

• those wanting to top up their retirement savings
• those who hold multiple pensions and want to consolidate them into one policy
• self-employed individuals
• people without access to a workplace pension.

You, or your independent financial advisor, can choose the provider, the investment strategy, and how much to contribute. Typically, these types of pensions can offer more flexibility than the average workplace pension.

Like workplace pensions, personal pensions benefit from tax relief. The pension scheme will claim 20% (basic rate) tax relief on your contributions, and further tax relief for higher and additional rate taxpayers can be claimed via self-assessment tax returns.

State Pension

The State Pension is a regular payment from the government once you reach State Pension age. How much you receive is based on your National Insurance (NI) record.

To receive the full new State Pension (currently £230.25 per week or £11,973 per year), you need 35 qualifying years of NI contributions. You will receive a proportionate amount if you have between 10 and 34 years.

Qualifying years can come from:

• working and paying NI
• receiving NI credits (e.g. for caring or unemployment)
• paying voluntary NI contributions.

As of 2025, the State Pension age is 66. However, it is set to rise to 67 between 2026 and 2028, and possibly further in future years. You can check your exact State Pension age using the government’s online calculator, here: Check your State Pension age - GOV.UK.

Final thoughts

Each type of pension plays a vital role in your retirement planning. Workplace pensions offer a valuable boost through employer contributions, personal pensions give you flexibility and control, and the State Pension provides a foundation of income in later life.

If you are unsure about your pension options and whether you are on track to meet your retirement goals, please get in touch. We help our clients to navigate the choices and build a retirement plan that suits and meets their goals.