Your workplace pension – are you on track?
How good is your workplace pension? For many employees, their workplace scheme is their primary tool for building retirement savings. However, it is really important to make sure it’s on track to meet your life expectations when you retire. It may not be “set up” properly (losing you money over the long term). Or, there could be better options elsewhere in the pension market.
Below, our financial advisers offer a practical guide to evaluate your workplace pension. We’ll show you how to locate your scheme’s information so you can judge its “inner workings,” possibly achieving some quick wins with an adviser’s help.
Understanding your workplace pension
All workplace pensions are set up by employers, but come in two main forms. Firstly, there are Defined Benefit (DB) pensions. These are sometimes called final salary or career average schemes, and they promise a retirement income based on factors such as your salary and length of service. They are common in public services, such as healthcare, teaching and the police force.
The second (more common) type is known as Defined Contribution (DC) pensions. Colloquially, they are called pension “pots” and are highly popular in the private sector. In simple terms, this pension involves building up a pot of money invested over time. Both you and your employer put money into the pot, and the income you receive in retirement depends on how much has been paid in, how well the investments perform and any charges which apply.
Locating your pension information
It may not be immediately clear who your pension provider is. For instance, DC schemes are often run by providers external to your employer.
If you are unsure, simply ask your employer or HR department. They can give you access to your account or send you recent statements. You can also check old paperwork or payslips for details of previous pension contributions, especially if you’ve changed jobs a few times.
Don’t forget about your old pensions. If you’ve lost track of pensions from previous jobs, the UK government’s Pension Tracing Service can help you find contact details for old providers.
Once you have access, it’s time to evaluate your pension. A good first step is to check how much you and your employer are contributing. Under the UK’s auto-enrolment rules in 2025-26, the minimum contribution rates for DC pensions are 5% employee and 3% employer.
Speak with an adviser about whether the contribution levels are enough to attain your retirement goals. Increasing your contributions – even by 1% – could have a major compounding effect over time. If your employer offers a matching contribution scheme (e.g. up to 10%), consider contributing enough to get the full match.
Looking “under the hood”
Many employees with DC workplace schemes are invested in a “default” fund, typically including a diversified mix of global equities and bonds. The default option may suit certain individuals, but it may not align with others – e.g. those with a higher/lower risk appetite for investing, or people wanting ethical or sustainable fund options.
It’s also important to consider the charges and fees you are paying. All DC pension schemes carry costs, usually expressed as a percentage of the fund (e.g. 0.5%-1.0%). Lower charges mean more of your money stays invested.
Compare your fund’s Annual Management Charge (AMC) with industry benchmarks, and also consider which investment approach is important to you. For example, passive index funds are typically cheaper than actively managed ones, but some people may be prepared to pay more for the investment selection and market analysis offered by an active fund.
Finally, review historical performance over one, two and five years. Past performance isn’t a guarantee of future results, but it gives insight into how the fund has navigated different market conditions. If your fund consistently underperforms its benchmark or similar alternatives, it may be worth considering a change.
Considering options
At Castlegate, we suggest evaluating your workplace pension in light of your broader financial plan. For instance, if you have multiple pensions from previous jobs, consider speaking with an adviser about consolidating them. Doing so could reduce fees, simplify management and offer a clearer picture of your retirement savings.
Sometimes, an employee may wish to focus their retirement savings on a personal pension instead of their workplace scheme. For instance, a Self-Invested Personal Pension (SIPP) could offer more control over how your money is invested, access to a wider choice of funds or the enhanced ability to manage your own portfolio.
If you have a final salary pension, there is typically the option of transferring it to a new pension scheme (DC) up to one year before it starts delivering benefits to you. However, this is a costly, lengthy and complex process. It is usually not in an individual’s best interests to transfer, but it may be suitable in certain circumstances. Speak with an adviser to explore your options.
Invitation
Interested in exploring pension planning further? If you want to ensure you’re taking the right steps to safeguard your retirement, please get in touch.
Please note:
Your capital is at risk. Investments can go down as well as up. Past performance is not indicative of future results. Tax treatment depends on individual circumstances and may change. This content is for information only and not investment advice. Any decision to invest is the reader’s own. Diversification is key to managing risk. Market volatility affects investment values. Inflation erodes savings. Liquidity risks may prevent quick access to funds.
