If you’re wondering what the coronavirus pandemic could mean for your workplace pension, read on.
A record number of people are saving in workplace pensions 1. This will include many savers who also have personal pensions and other savings, such as ISAs. This is good news, as it means millions are taking positive actions to secure a better retirement.
The coronavirus pandemic has raised many questions. Perhaps you’re wondering what it means for membership of your workplace pension. Below we answer six common questions and answers about workplace pensions during the coronavirus pandemic.
1. Will membership of my workplace pension stop during the coronavirus pandemic?
No. The core rules overseeing workplace pensions haven’t changed in the wake of the coronavirus pandemic. Today, all employers must provide their employees with a workplace pension, and they must automatically enrol all eligible employees into it. The coronavirus pandemic has not changed these rules.
2. Will my workplace pension contributions stop if I am placed in furlough during the coronavirus pandemic?
No. The government has stated that workplace pension contributions should continue if an eligible employee is placed in furlough. Although, if your income is lower when in furlough – perhaps at the 80% level of usual income, as currently guaranteed by the furlough scheme – the contribution into your pension could be reduced by the same proportion.
3. Can my employer stop their pension contributions during the coronavirus pandemic?
No. The government has stated that employers must continue to meet their workplace pension contribution obligations, despite the coronavirus pandemic. Clearly, if someone was to be made redundant, their former employer would have no obligation to keep contributing to the redundant person’s workplace pension.
4. Can I increase, reduce or stop my pension contributions during the coronavirus pandemic?
Yes. As before the pandemic, most employees can continue to increase, decrease or stop their workplace pension contributions. Any changes, however, should be carefully considered before they’re implemented. A decision to reduce or stop contributing to a workplace pension is likely to also mean a reduction or stopping of contributions from the employer. This could have detrimental implications for your retirement plans as less saving is likely to mean less income in retirement. If you have a workplace pension, you can find more information on our help and support page.
5. Can I access my pension savings during the coronavirus pandemic?
It depends on your age. Unlike the state pension, workplace pensions can typically be accessed from age 55. Any suggestion that you can access your pension before age 55 should be viewed with great suspicion as it could be a sign of a pension scam. If you are considering accessing your pension, it’s important to take your time and consider your options carefully.
We would also recommend that you get financial advice, so speak to your financial adviser. If you don’t have one, we can help put you in touch with one. You should also contact Pension Wise, a government-backed agency. Their free guidance service will outline the key points to be considered before acting.
6. Who can give me more information about my workplace pension?
The provider of your workplace pension or the scheme’s trustees should be able to provide you with the information you need. If your questions relate to your current workplace scheme your employer may also be able to help.