The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.
Tax treatment varies according to individual circumstances and is subject to change.
What is a group personal pension?
A group personal pension, or GPP is a collection of individual pension plans set up as a group. (traditionally found with companies and the company pension scheme.)
One of these plans would belong to you and because it’s set up as a GPP, this allows you to take advantage of lower charges than you might get if you set up a personal pension plan.
In most cases, your contributions are taken directly from your salary and paid by your employer to the pension provider. The funds that build up over the years until retirement will then be used to give you a regular income in your retirement.
To encourage people to save into a pension, the Government offers generous tax advantages:
- The contributions made benefit from tax relief. So each time a payment is made into into the plan, the taxman pays in too.
- If you are a higher rate taxpayer, then you can claim additional tax relief through the self-assessment.
- Savings are allowed to grow in a tax-efficient way.
- If a death occurs before an individual starts taking a pension, it can be paid as a tax-free lump sum to that individuals family or another nominated individual.
There is a lot more involved with the current taxation law and practice. Our Pension Tracing Service offers you this information FREE of charge when using us to trace or review your pensions.
If you change jobs, your group personal pension is usually automatically converted into a personal pension which you can continue paying into independently.
However, you should check to see if your new employer offers a pension scheme. You may find you’ll be better off joining your new employer’s scheme, especially if the employer contributes. Compare the benefits available through your employer’s scheme with your group personal pension.
If you decide to stop paying into a group personal pension, you can leave the pension fund to carry on growing through investment growth – check to see if there are extra charges for doing this.
Due to the pension crisis, the government has introduced a law the requires employers to enrol all eligible jobholders into a company pension scheme. This is to encourage people to save more for their retirement. Employers will automatically enrol their eligible workers into a workplace pension scheme unless they decide to opt out.
The large employers have already started and the medium and small sized companies will follow in the next few years. This means many more people will have access to a pension at work to help them save for their retirement.
Who will be automatically enrolled?
Employers will have to enrol workers into a workplace pension if the worker:
- is not already in a suitable workplace pension scheme
- is at least 22 years old, but under State Pension age
- earns more than £9,440 a year (tax year 2013-14)
- works in the UK
Automatic enrolment applies equally to full-time and part-time workers as long as the required criteria, above, has been met.
When is this happening?
Automatic enrolment is being introduced in stages between 2012 and 2018. Your employer will let you know the exact date nearer the time and a letter will be sent detailing whether an individual has or or has not met the eligibility criteria mentioned above.