Unless you really can’t afford to contribute, or your priority is dealing with unmanageable debt, it makes sense to join.
Your money is then invested so it can grow.
When you’re over 55 (age 57 from 2028), you can use your money in the way that best suits you.
That might be getting a guaranteed income, taking a flexible retirement income or a mixture of both.
There are three options employers might choose when looking to set up a defined contribution pension for their workers. These include:
- An individual trust pension scheme – a pension scheme that’s only available to that employer and its workers. Trustees run the scheme in the best interests of members (i.e the workers of that company).
- A master trust pension scheme – a pension that can be used by separate employers and their workers. Trustees run the scheme in the best interests of all the members (i.e. the workers of all the companies that are using the pension).
- A group personal pension – a type of workplace pension set up by your employer. It’s a collection of individual pension plans – and one of these plans will belong to you.
As well as these main options, there are some others that smaller companies or directors of companies might set up.
These have more complex arrangements that offer more features.
One example is a small self-administered scheme (SSAS).
A small self-administered pension scheme is a type of defined contribution workplace pension that can give extra investment flexibility.