Saving into a pension
Is a pension right for me?
For many people, joining a workplace pension is a good way of building up a pot of money to provide an income in retirement. You'll get tax relief on your contributions and your employer may pay in too, giving a significant boost to your savings.
However there may be times when paying into a pension may not be the best option. For instance if you have outstanding debts which need to be paid off or there are other financial priorities. Saving into a pension plan is not for everyone. Joining a plan may not be suitable for you, particularly if these savings could affect your entitlement to any means tested state benefits.
Your employer may also stop paying in to your pension if you stop, check with your employer.
Please note, you may have to pay tax when you take money out of your pension.
Do I have to join my workplace pension scheme?
Since 2012, employers have been required to automatically enrol their eligible employees into a workplace pension scheme. If and when you’re notified that you’ve been automatically enrolled, you can choose to opt out, but you may be missing out on benefits, such as contributions from your employer and tax relief.
Your employer is required to enrol you again every three years if you are still eligible and not currently a member of their pension scheme. You will have the right to opt out again.
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How do I join my workplace pension scheme?
If you are eligible, you'll be automatically enrolled into the pension scheme, and your contributions and your employer's contributions will be put into the default investment option. You’ll be able to move your money into the investment options of your choice once we have received your first contribution.
Once you've been enrolled you'll receive a notification explaining the pension scheme and your options to stay in or opt out.
If you’re automatically enrolled you can visit WorkSave Choice (subject to your scheme using Choice) to review your scheme and personal details or to opt out if you do not want to stay enrolled in your workplace pension scheme.
Even if you are not eligible to be automatically enrolled, you may still be able to join your workplace pension scheme. Talk to your employer about how you can join.
Do I have to contribute every month?
You can stop contributions to your pension at any time without penalty. We'll still take charges from your fund even if you stop contributions.
You can restart contributions at any time, again without penalty. If your employer is deducting the contribution from your salary they may restrict when you can restart. Your employer will also have to auto-enrol you into their scheme again every three years if you are still eligible.
Think about why you've decided to stop contributions, as it will have an effect on your retirement income. It's worth bearing in mind that saving regularly can be easy to stop but difficult to start up again. After a month or so you may not notice the contribution going from your salary, but if you decide to stop, starting again can be hard. Your employer may also stop paying in to your pension if you stop, check with your employer.
Use our retirement planning tool to help you plan ahead and see if you're on track to fund the retirement you want.
Why have I been enrolled into my workplace pension scheme again?
If you’ve previously opted out of the scheme, re-enrolment is an opportunity to start saving into your pension pot. Your employer is required to enrol you into the workplace pension scheme every three years if you’re still eligible and not currently a member of their pension scheme.
You have the right to opt out again within one month of being re-enrolled.
Can I transfer other pensions into my Legal & General plan?
Although your pension with Legal & General may accept transfers, we would always recommend you speak to a financial adviser before transferring any other pensions you have to us.
Your other pension providers may charge you if you transfer out of their plan and there may be other benefits or guarantees attached to your pension that you might forfeit if you decide to transfer it. If you are a member of a defined benefit scheme with a transfer value of more than £30,000, you will need to take advice before you can transfer it.
You can visit Unbiased to help you find a financial adviser in your local area. Advisers will usually charge a fee for their services. If you decide not to speak to a financial adviser, you can contact our Employee Support Team on 0345 070 8686 to discuss transfer options that may be open to you. We may record and monitor calls. Call charges will vary.
How much can I save in my workplace pension?
You can contribute up to 100% of your relevant earnings or £3,600 gross, if greater, into your pension plan and still get tax relief.
If your contributions go over the annual allowance including employer contributions (currently £40,000 in the tax year 2018/2019) you will incur a tax charge up to the highest rate you pay.
For those with earnings over £110,000 a year, and £150,000 a year when total pension contributions are included, the annual allowance may reduce below £40,000 but not less than £10,000. Please note it may be possible to carry forward unused annual allowances from up to three previous tax years.
If you have started drawing a flexible income from your pension pot, your annual allowance will reduce to £4,000 a year (this is called the Money Purchase Annual Allowance (MPAA)) and you can't carry forward any unused allowances. If you want to carry on building up your pension pot this may influence when you start taking income. Taking your tax-free cash lump sum without any other income doesn't affect your annual allowance.
What happens to my pension if I change my employer?
Upon leaving your current employer you'll have some options available to you with regard to your pension.
- The plan will still be invested for you and annual management and fund management charges will continue to be deducted. You may be able to continue payments or start again in the future depending on the type of scheme your new employer has set up. Please note, if annual management charges plus fund management charges are greater than any fund growth, the value of your investments will reduce.
- At any time in the future, you can transfer the pension you hold with us to another provider. We won't charge you to do this.
As soon as we receive the last payment from your old employer, we'll send you a leaver's pack which will explain all your options in more detail.
How do I change my contact or address details?
You can change your contact details now by logging into Manage Your Account.
You can also call our Employee Support Team on 0345 070 8686 or send us your new details in writing. Please make sure you quote your plan number. We may record and monitor calls. Call charges will vary.
How do I add or change a beneficiary?
Adding a beneficiary means nominating someone you wish to receive any benefits from your pension in the event of your death.
All you need to do is inform us of the request in writing. Some schemes allow you to do this online via Manage Your Account.
An online form is also available on your scheme microsite. If you don’t know where that is, check with your employer. There will usually be a link on your employer’s intranet site. If you are unable to do this online, simply send us a letter, quote your plan number and give us the full name and address of the person you want added to your plan.
If you want any beneficiaries removed, likewise simply inform us of the change in writing (although please note, once you've nominated a beneficiary you can't go back to having no beneficiary at all).
How do I change my contribution amounts?
If your pension contributions come straight from your salary then you need to tell your payroll department about any changes you wish to make to them.
If you pay by your own direct debit simply call us or send us a letter or email, quote your plan number and tell us what you'd like to change your payments to. You can increase or decrease your regular contributions, but you may have to meet a minimum amount. Your employer may also restrict the number of times you can do this in a year.
Can I cancel my plan?
If you have been automatically enrolled, you can opt out within one month and you’ll get your money back and be treated as if you never joined the plan. Your enrolment communications will explain how to do this. If you don’t opt out by this date you can stop contributing at any time. If you do this, both your contributions and any made by your employer up to that point will remain invested in your pension pot until you take your benefits.
If you have not been automatically enrolled, after you have joined the plan, we will send you a letter containing details of what you will need to do if you decide to cancel and ask for any money back that you have paid. The letter includes a form, called a ‘cancellation notice’. If you decide to cancel, you will need to complete this notice and post it back to us at the address shown on the notice within 30 days of receiving it.
After this period HMRC rules state that your money must remain invested in a pension scheme until you take benefits. For the vast majority of people this will mean that you won’t be able to take benefits until you have reached age 55.
What income will I need in retirement?
Our retirement planning tool helps you understand how much you may need to pay in based on the retirement income you hope to get. If you join or are already in a company pension scheme, you should receive an annual statement from your pension provider showing the progress of your savings over the last year.
The size of your pension pot will depend on how much you pay in and for how long, together with how your chosen investment funds perform and the charges you pay. Generally speaking, the sooner you start and the more you pay in, the more you'll benefit at retirement.
Don't forget you may want to take into account any other savings or investments that you're relying on to provide an income when you retire.
In general, tax treatment depends on your individual circumstances and may be subject to change in the future.
If you are uncertain how to proceed we recommend you seek financial advice. You can find an adviser in your local area by visiting unbiased.co.uk. Advisers usually charge for their services.
Will the State Pension be enough for me in retirement?
You become entitled to a Basic State Pension by paying National Insurance contributions during your working life. The more years you have paid National Insurance the larger your State Pension, with the maximum entitlement currently based on contributions of 30 years or more.
Like the name suggests, the Basic State Pension is unlikely to give you enough income to fulfil all your lifestyle wants and needs in retirement. In the current tax year (2018/2019), it only gives you £125.95 per week, or if you were born on or after 6 April 1951 (if male) or 6 April 1953 (if female) a new flat rate of £164.35 per week to live on (for tax year 2018/2019). And this amount could be even less if there have been any gaps in your National Insurance contributions record.
You might be able to get more but this will depend on your personal circumstances, for more information visit GOV.UK.
Find out more about State Pensions and see how much you'd be likely to receive from the state when you retire with a State Pension Forecast.
By joining your employer's pension scheme your income in retirement could be significantly more than if you just rely on the state as both you and your employer contribute.
What are my options for accessing my pension pot?
The best place to get information about your options for your scheme is on your employer pension scheme website. If you don't know where that is, check with your employer. There will usually be a link on your employer’s intranet site.
You can also PDF file: Taking money from my pension PDF size: 339KB .
I’m retiring in the near future. Where can I get a retirement quote?
You can request a retirement quote from our Claims team by ringing them on 0370 165 9406.
The team are available 8.30am – 7.00pm Monday to Friday and from 9.00am to 12.00pm on Saturday.
We may record and monitor calls. Call charges will vary.
Types of pension
What’s a defined contribution scheme?
A personal or workplace pension where contributions and investment performance dictate how much money you have available to provide an income for retirement. Also referred to as ‘money purchase’ schemes as whatever pot you have built up can be used to provide an income in retirement.
What’s a defined benefit scheme?
The most common type of defined benefit scheme is a final salary scheme. The benefits depend on:
- Your number of years of service.
- Your final salary at the time benefits are taken.
- The accrual rates of the scheme (determined by your employer).
Defined benefit schemes can be:
- Contributory - both the employer and employee pay contributions to provide benefits.
- Non-contributory - only the employer pays contributions.
For further information on defined benefit schemes please speak to a financial adviser. You can find an adviser in your local area by visiting unbiased.co.uk. Advisers usually charge for their services.
Funds and investing
What investment options are available through my Legal & General plan?
You will need to check your policy documents to find out whether you have a:
- WorkSave Pension Plan.
- Group Stakeholder Pension Scheme.
- Group Personal Pension 2000 Plan.
- WorkSave Buy Out Plan.
- Trustee Buy Out Plan.
- Company Pension Scheme.
- Group Additional Voluntary Contribution.
You can find the relevant fund information for your plan detailing all the funds available to you in the ‘Funds’ section. You can also log in to Manage Your Account to see information specific to your scheme.
What investment option is right for me?
The vast majority of people who join a workplace pension scheme invest in its default investment option which is designed to be broadly suitable for the majority of savers. You should remember that a default option has not been assessed against your own personal circumstances and so it might not be the right investment choice for you.
If you wish to choose your own investment options, we can help you understand the things you need to take into account. An important element of this is how much investment risk you're prepared to take in pursuit of a higher potential return.
Use our attitude to risk tool to help you understand more about your personal attitude to investment risk. After using the tool you should check whether the suggested risk profile is right for you as we can't take into account your individual circumstances or preferences.
Once you understand your attitude to investment risk, you'll be in a better position to choose the investment funds that are right for you.
What’s a Lifestyle profile?
A lifestyle profile is an investment option. Your contributions initially go into a fund or funds that are typically invested mainly in shares. This offers you the potential for long-term growth. In the years before your selected retirement date, we steadily switch your investment into funds with lower risk.
Please note - you can't combine a lifestyle profile with any other fund. If you're already invested in a lifestyle profile and want to change your investment, you'll have to switch all existing payments and redirect any future payments to your new fund choice.
Likewise, if you'd like to start investing in a lifestyle profile, you'll have to switch all existing payments and redirect all future payments into the lifestyle profile.
How do I change the funds I’m invested in?
If your scheme allows, you can make changes to your investments by logging in to Manage Your Account. There is a video in the Manage Your Account ‘Help and Support’ section which explains what you need to have decided before you change your investments. You will need to log in to see the video.
You can also make changes by calling us or sending us a request by letter or email. Please make sure you quote your plan number. If you make your request in writing you will need to complete a changing your investments form which you can download from the document library.
Please note - you can't combine a lifestyle profile with any other fund. If you're already invested in a lifestyle profile and want to change your investment, you'll have to switch all existing payments and redirect any future payments to your new fund choice. Likewise, if you'd like to start investing in a lifestyle profile, you'll have to switch all existing payments and redirect all future payments into the lifestyle profile.
The value of your pension pot may fall as well as rise, and is not guaranteed. You should choose your funds carefully and review them regularly, particularly if you are close to retirement.