Understanding Pensions

What is a pension?

Essentially, it’s a type of savings plan to help people save money for later on in life. A percentage of your pay is put into the pension scheme automatically every payday throughout your working life, to create a pot of money for later on when you decide to retire or work less. Pensions offer a way to save tax-free and get tax back, to help build up a pot of money for you to live off later in life. The sooner you start a pension, the more tax you'll save and get back, and the bigger your pension pot when you finally stop work. Here is a really useful video explaining in more detail.

Why is it important?

For some people, State Pension is sufficient in providing income when they retire. However, for most it is quite low and it is not possible to experience their desired standard of living they hope for when they retire.

For most people it is therefore a good idea to join a pension scheme, allowing them to save up money over a period of time. This video explains the importance of a pension - warning: contains an animation of a spider which some viewers may find a bit creepy.

Starting a pension

It is really easy to start saving through a workplace pension, like the one we offer at LUU. Any money you put into the workplace pension scheme will be topped up twice – first by LUU and second by the government, in the form of tax relief. For every £80 an individual pays into a pension, the government will top it up with £20 basic rate tax relief and those who pay higher tax rates can claim back the extra. Play this video to find out more.



Pensions at LUU

We currently offer pensions through The Peoples Pension. All eligible employees must, by law, be auto-enrolled into a qualifying workplace pension scheme within the first six weeks of employment. If you have previously opted out of a pension scheme with a previous employer you will need to do so again when joining LUU. All staff are welcome to contract into a pension scheme, separately to auto enrolment.

What is auto-enrolment?

This is where employees automatically contribute to their pension, along with LUU and the government. To qualify for auto-enrolment employees must:

  • Be between 22 years old and under State Pension age

  • Earn over £10,000 in the current tax year

  • Work in the UK

There is a minimum amount that has to be contributed by you, your employer, and the government in the form of tax relief. This changes regularly with government legislation, but you can increase your contributions if you wish to, this is called ‘voluntary contributions’. If you would like to increase your contributions, please speak to a member of The People Team at unihr@leeds.ac.uk.

Contractual joining

All staff are welcome to contract into a pension scheme, separately to auto enrolment. You will be provided information on how to do this when you commence your employment. If you decide to do this later on, please feel free to contact The People Team.

Throughout Working Life

Monitor investments

You should check your pension pots regularly to make sure they are on track to meet your financial requirements. Our staff will receive an annual pension statement in the post. Make sure you keep your address updated on iTrent to ensure that your statement is delivered to your current address.

Saving more where possible

If it is possible for you to put more money into the pension pot each year it is wise to, provided you have sufficient money to live on. You can find a link to a savings calculator here to help you understand how much it is possible for you to save.


Combining pension pots

If you have had more than one job throughout your working life, it is likely that you will have multiple pension pots. It may be worth thinking about combining them into a single scheme as you near retirement. New starters will have been enrolled with our provider the Peoples Pension, this video explains more about combining your pension pots into this scheme.

Thinking About Retirement

Get a state pension statement

This shows you how much State Pension you have built up so far through National Insurance contributions along with when you will be eligible to receive your state pension and how to increase it, if you can. This can be done through clicking this link and following the step by step process it takes you through.



Tracking lost pensions

It is likely that most people will have various pension pots, in order to plan well for retirement you will need to figure out how much income you’ll get from all of your pensions. Most pension schemes of which you’ve been a member must send you a statement each year, these statements include an estimate of the retirement income that the pension pot might generate when you reach retirement.

If you’re no longer receiving these statements, then to track down the pension there are three bodies you can contact:

Advice planning for retirement

Your 3 pension options in 3 minutes

Retirement

Make sure you have enough to live on

Make sure your pension and any other income you have is enough for you to live on happily and provides the security that you need. You should check the benefits you will receive as the age-related benefits you get can vary. it is a good idea to check these as it may affect how you decide to use your pension.

Create a retirement budget

When you understand what your income will be, it is a good idea to use a budget planner to plan for spending and understand how much you have to live on each month.

Options for taking your pension pot

Taking your pension pot in one go

Two ways to take your pension money a bit at a time

Employee Assistance Program

Our EAP has a free Financial Health Assessment which is a good place to start. There’s also a handy Financial Wellbeing Toolkit, which covers assessing your financial wellbeing, budgeting, debt, saving, planning for the future, financial change and stress, money & emotions.

LUU staff can access our EAP through UNUM, by calling 0800 072 3877 or visiting this link and entering the user ID: well@work and password: unum.

Other Useful Resources