Pension FAQ (Detailed)

Retirement should come with lots of happiness and worry free life. This is possible only when you have a regular income coming so that you are free from any tension. The income that you receive when you get retired is called as pension or retirement income. This is possible only if you have made some savings for the same by buying pension insurance or contributing to National Insurance. Most of the people are eligible to get basic state pension but it may not be sufficient for living and may require investment in some other pension plans as well. More information can be got through various sites providing the same and they also have answers to some FAQs. Mentioned below are the answers to many of frequently asked questions:

  • What is the criterion to get enrolled?
    The employers will enroll the employees if they are eligible for it. If you are not already enrolled for the pension plan your employee will do it if you are above 16 years of age and below 75. If you meet the criteria for enrollment at a later age, say for example you start earning more at the age of 23 your employer will automatically enroll you for it.
  • What is the aim behind the pension plan?
    The aim is that the people have additional saving for retirement other than the state pension. State pension is a fund provided by the state when you make investment in the national insurance. If you want to have income more than the state pension you will require saving more from your salary. If you do not do so you may end up leading a lower standard of life. The government therefore have instructed the employers to automatically enroll the employees for pension plans so that they start saving. However, there is an option to opt out of it but it is recommended for better standard of living after retirement.
  • Who will pay for the pension plan?
    The contribution towards the pension plan goes from your pocket and even the employer contributes towards it. The employers are bound to do this if the employee is earning more than £5668.00 per annum in the year 2013-14. The government contributes by providing tax relief for some and thus the tax that you pay, a part of it goes into your pension plan.
  • How much money can I get from my workplace pension?
    The money that you will get from your workplace as pension can be known from the person who manages pension department in your company. They may also provide you with a pension calculator so that you can estimate the income that you will receive after retirement.
  • Is workplace pension enough?
    If you have workplace pension it means that you have made a move towards living a lifestyle of your choice after retirement. If you think that the money you save under the pension plan will not give you enough income after retirement you can think of contributing more towards it. This can be done by working for longer hours or by having other means of doing the saving. The calculation for the retirement income should be done keeping certain things in mind like:

    • Expenses for running a car
    • Expenses on lunches and drinks with friends
    • Holidays and trips
    • Sports and other leisure activities

    These are only to name a few.

  • What will happen to my workplace pension if I move to another company?
    When you switch job your workplace pension automatically gets enrolled to the pension scheme of the new company. The large employer will immediately enroll your for pension plan if you fulfill all their criteria. The small companies may take time and will definitely follow after some time. The new employer if has the pension plan but do not enroll you automatically then they just may ask for your wish to join in. If they do not enroll it may be due to any one of these two reasons:

    • They may not be requiring to do so or
    • they do not happen to meet the criteria to get enrolled for pension scheme.
  • If due to any reason you start a new personal pension plan then you have the liberty to combine the old and new pension schemes. You can do this or not? The process of doing it will be told by the person who has given the plan. There is possibility of making contribution to the old pension scheme even after leaving the job. You may be required to approach the pension plan giver and ask for the possibility. You may also need to know if there will be a cost involved and if you will get tax relief on the same.

Taking up pension plan is a good move towards a healthy and happy retired life.