It’s important to understand your pension is a long-term investment. Its value can go down as well as up and you could get back less than was paid in.
How pensions work
Pension plans are a way of saving for the future. With most workplace pensions you and your employer pay in while you're working. Then when you're ready to slow down or stop working you can use it to support yourself - as long as you've reached the minimum pension age.
This video explains the basics:
You get more than your own contributions
The money you pay into your plan is topped up in two ways:
- Employer contributions: IBM will pay into your pension plan as well.
- Tax benefits: A pension plan is one of the most tax efficient ways of saving for your retirement.
For more information about how this works, download our Guide to tax relief, limits and your pension (PDF 359KB)
Please remember, laws and tax rules may change in the future. Your own circumstances and where you live in the UK also have an impact on tax treatment.
Why start now?
Saving into your pension plan may not feel like a priority when you have other expenses to deal with. But it can have a big impact on your lifestyle in retirement.
The money in your pension plan is invested, so it has the potential to grow over time. That means starting earlier can make a big difference. Imagine you start at 25 years old and earn £25,000 a year. The chart below shows how starting to save a slightly higher percentage of your salary affects the final pension pot you could potentially build up.
It's your money (even if you change jobs)
You have a right to the money in your pension pot, even if:
- You change jobs
- Your company changes hands or ceases to exist
What happens if you leave your job?
If you leave the company you may still be able to pay into this plan, though your employer will stop paying in. Charges will continue to be applied to your plan, but you won't lose your rebate due to leaving your employer.
You'll still be able to change your investments and keep full access to your Standard Life account even if you leave your job.
Your options in retirement
You can normally access the money in your pension from age 55 (rising to 57 from 6 April 2028).
You don’t have to decide yet, but when you get to that stage it's up to you how you use your pension money.
- Get a flexible income: Leave the money in your pension pot invested and take a regular income from it. You can change the amount as you go.
- Get a guaranteed income for life: Buy an annuity, which gives you a guaranteed income for life. You can't change this later.
- Take a lump sum(s): Take cash from your pension pot in one or more lump sums. The first 25% is normally tax free.
- Combine your options: You can take a combination of any of the options above, for example take a lump sum and buy an annuity.
When it comes to arranging your retirement income, we would always recommend that you shop around because other providers may offer a higher level of retirement income and access to different options that could suit you better. We also recommend you seek appropriate guidance or advice to understand your options at retirement. From age 50 you can get free impartial guidance from Pension Wise - a service from MoneyHelper
You can also log in to your online account and use our personalised tools to help you understand which options might be right for you.
Looking for financial advice?
A financial adviser can help you plan for the future and help you get the most out of your pension plan. Financial advice will cost money, but it could help you be better off in the long run. An adviser may provide their first consultation for free and then discuss their fees for ongoing support.
If you want to use a financial adviser, you should always make sure they're authorised by the Financial Conduct Authority (FCA). The government's MoneyHelper service has a useful guide to help you find a financial adviser
If you're looking for help with your company pension, or other financial matters, but don't think you need a financial adviser, you can always use the government's free, impartial Money Helper service