Company Pension Schemes

If eligible, your employer must automatically enrol¹ you into a workplace pension scheme. Paying into a pension scheme has important advantages as you not only benefit from your employer’s contributions, but you also receive tax relief on your contributions.

There are multifarious types of pension schemes in the UK, all offering variable benefits. While in previous years, many had lifetime employment with one company, this is no longer the case. The result? You own several small, deferred pension pots by the time you come to retire. However, funds chosen historically may no longer be appropriate and the difference compound growth can make to your final pension pot over time can vary immensely, so having a financial adviser review your company pensions can prove beneficial along the way.

The Pensions Policy Institute recently produced a report² which considers the impact of introducing a Lifetime Provider Model which would prevent small pots building up for workers in the future. The outcome implies that this is a longtail solution:

‘This policy would mean an overhaul of service provision from schemes, employers³ and the agencies which support them, the cost of which is likely to be significant.’

In many circumstances it is not in the client’s best interests to consolidate their company pension schemes, as many have valuable benefits or guarantees, which is why it is imperative that financial advice is taken.

A Client’s Story: Mark Wilson | Head of Service UK & Ireland, GE Vernona

“My 54th birthday was fast approaching as were thoughts about my future retirement. I needed advice and guidance on what options were available to me such as help with cashflow planning and estimating when I could actually afford to retire. Gemma came highly recommended and together we explored what it was I wanted to achieve, while she explained what she could, and could not do.”

Lifestyle Cashflow Plan

“The first step was to utilise Darcy Financial Planning’s Lifestyle Cashflow Planning service.”

“We spent an hour or so discussing my various pension and savings pots, what type of lifestyle my wife and I would like in retirement, whether we wanted to keep our existing house or downsize, attitude to risk, etc. Gemma then proactively approached all my various pension providers to obtain up-to-date valuations, all of which went towards preparing my personal Cashflow Plan.”

“A couple of weeks later we met up with John, Gemma’s Cashflow Manager, to review the report. The feedback was amazingly clear, illustrating various “what if” scenarios, shown in both easy to grasp graphic form, and in detailed numeric form. But best of all, it showed that I could actually afford to retire much earlier than I’d anticipated. We went on to discuss various investment options and which ones were best suited to my needs and my specific circumstances.”

Investment choices

“After discussing my options in detail with Gemma, I realised that my current company pension, like most generic employer-provided DC [defined contribution] schemes, assume you will use your fund to buy an annuity and progressively de-risk your investments as you approach retirement. This is not necessarily appropriate if you have a mixture of pension pots or intend to use your investments on a draw-down basis, in which case a significant proportion of your pension remains invested for 20 years or more.”

“I therefore decided to transfer most of my employer DC fund into an SJP actively managed fund, while leaving a small amount of money in the company account to continue to take advantage of employer contributions. This means I have more control over my investments as these are now reviewed on an annual basis with Gemma as part of her ongoing service. The entire process, managed by Gemma, went extremely smoothly and I am very pleased with the outcome.”

The outcome

The advice provided to Mark was given after a full evaluation of his specific needs, circumstances and requirements.  The solutions provided would not be suitable for most investors and the information provided does not constitute advice.

The sources

1 Gov.uk Employers Workplace Pension Rules, March 2024
2 The Pensions Policy Institute Lifetime Provider Report, February 2024
3 The Pensions Regulator Employer pension contributions and funding, March 2024

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than you invested.

The levels and bases of taxation can change at any time. Tax relief is generally dependent on individual circumstances.

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