Understanding Pensions
What is a pension?
Essentially, it’s a type of savings plan to help people save money for later on in life. A percentage of your pay is put into the pension scheme automatically every payday throughout your working life, to create a pot of money for later on when you decide to retire or work less. Pensions offer a way to save tax-free and get tax back, to help build up a pot of money for you to live off later in life. The sooner you start a pension, the more tax you'll save and get back, and the bigger your pension pot when you finally stop work. Here is a really useful video explaining in more detail.
Why is it important?
For some people, State Pension is sufficient in providing income when they retire. However, for most it is quite low and it is not possible to experience their desired standard of living they hope for when they retire.
For most people it is therefore a good idea to join a pension scheme, allowing them to save up money over a period of time. This video explains the importance of a pension - warning: contains an animation of a spider which some viewers may find a bit creepy.
Starting a pension
It is really easy to start saving through a workplace pension, like the one we offer at LUU. Any money you put into the workplace pension scheme will be topped up twice – first by LUU and second by the government, in the form of tax relief. For every £80 an individual pays into a pension, the government will top it up with £20 basic rate tax relief and those who pay higher tax rates can claim back the extra. Play this video to find out more.
Pensions at LUU
We currently offer pensions through The Peoples Pension. All eligible employees must, by law, be auto-enrolled into a qualifying workplace pension scheme within the first six weeks of employment. If you have previously opted out of a pension scheme with a previous employer you will need to do so again when joining LUU. All staff are welcome to contract into a pension scheme, separately to auto enrolment.
What is auto-enrolment?
This is where employees automatically contribute to their pension, along with LUU and the government. To qualify for auto-enrolment employees must:
Be between 22 years old and under State Pension age
Earn over £10,000 in the current tax year
Work in the UK
There is a minimum amount that has to be contributed by you, your employer, and the government in the form of tax relief. This changes regularly with government legislation, but you can increase your contributions if you wish to, this is called ‘voluntary contributions’. If you would like to increase your contributions, please speak to a member of The People Team at unihr@leeds.ac.uk.
Contractual joining
All staff are welcome to contract into a pension scheme, separately to auto enrolment. You will be provided information on how to do this when you commence your employment. If you decide to do this later on, please feel free to contact The People Team.
Throughout Working Life
Monitor investments
You should check your pension pots regularly to make sure they are on track to meet your financial requirements. Our staff will receive an annual pension statement in the post. Make sure you keep your address updated on iTrent to ensure that your statement is delivered to your current address.
Saving more where possible
If it is possible for you to put more money into the pension pot each year it is wise to, provided you have sufficient money to live on. You can find a link to a savings calculator here to help you understand how much it is possible for you to save.
Combining pension pots
If you have had more than one job throughout your working life, it is likely that you will have multiple pension pots. It may be worth thinking about combining them into a single scheme as you near retirement. New starters will have been enrolled with our provider the Peoples Pension, this video explains more about combining your pension pots into this scheme.
Auto Enrolment
If you’re an employee, you’ll probably have been auto enrolled into a pension by your employer. If you have questions about it, check out Money Helpers auto enrolment section. They explain how auto enrolment works, and why it’s important to keep saving into your pension. They also look at specific scenarios that might be relevant to you – auto enrolment if you’re in debt, are about to retire or have multiple jobs, and there’s a handy frequently asked questions guide.
Pension Basics
Future you will thank you for saving into a pension – but if you’re new to thinking about retirement, this section is for you. Money Helper have created guidance which covers what pensions are and their advantages over regular savings accounts. There’s also guidance on the types of pensions – including for the self-employed, how to understand the details of your specific pensions, and how to check how your pension savings are growing.
State Pension
The State Pension is a really important part of people’s retirement. So this is why it’s so important to understand how it works. This section tells you all you need to know about the State Pension. We cover what you might get and how your National Insurance contributions determine your payments. We also have guidance on what to do if you’re moving abroad, what happens when you delay your State Pension and much more.
Building your Pension Pot
The secret to a successful retirement is to slowly and surely build up your retirement pot. Exactly how you do that will depend on your situation – but there are lots of things you can do. These resources look at the basics you need to know about growing your pension pot, including things like tax relief, how contributions work, and how to work out how much you might need to retire with. They also explain things like transferring your pension, merging old pots, and ways to boost your pension if you’re getting close to retirement.
Thinking About Retirement
Get a state pension statement
This shows you how much State Pension you have built up so far through National Insurance contributions along with when you will be eligible to receive your state pension and how to increase it, if you can. This can be done through clicking this link and following the step by step process it takes you through.
Tracking lost pensions
It is likely that most people will have various pension pots, in order to plan well for retirement you will need to figure out how much income you’ll get from all of your pensions. Most pension schemes of which you’ve been a member must send you a statement each year, these statements include an estimate of the retirement income that the pension pot might generate when you reach retirement.
If you’re no longer receiving these statements, then to track down the pension there are three bodies you can contact:
The pension provider
Your former employer if it was a workplace pension
Advice planning for retirement
Your 3 pension options in 3 minutes
Retirement
Make sure you have enough to live on
Make sure your pension and any other income you have is enough for you to live on happily and provides the security that you need. You should check the benefits you will receive as the age-related benefits you get can vary. it is a good idea to check these as it may affect how you decide to use your pension.
Create a retirement budget
When you understand what your income will be, it is a good idea to use a budget planner to plan for spending and understand how much you have to live on each month.
Options for taking your pension pot
Taking your pension pot in one go
Two ways to take your pension money a bit at a time
Employee Assistance Program
Our EAP has partnered with the Money Advice Service to provide access to a variety of helpful tools and calculators. These Financial Assessments are a good place to start. There’s also a really useful section on Retirement too.
LUU staff can access support via live chat through the My Healthy Advantage app (unique code MHA152161), by calling 0800 028 0199 or visiting www.healthassuredeap.com with the username 'endsleigh' and password 'StudentUnions'
Taking your Pension
Depending on what pensions you’ve got, you’ll have different options when it comes to taking your money. You might also have questions about when you can retire, or how to find out if you’ve got enough to retire on. Money Helper cover all that here, and this is also where you’ll be able to find out more about, and book, your Pension Wise appointment, letting you speak to an expert to make sense of how and when you can access your pension pot.
Pension Problems
Sometimes things go wrong, or you have questions about how pensions work. That’s why Money Helper have created this section. They will help you deal with pension issues if you're coping with divorce, debts, a death, or if you can’t find a pension. This is also the place to be if you need to make a complaint, and how your pension is kept safe.
Tax and Pensions
Tax plays a huge part in retirement planning. Whether you’re looking to understand basics like how tax relief works or whether your money is taxed when you actually retire, or more complicated rules like allowances and carry forward – Money Helper have got it all explained here.