If you’re not happy with your workplace pension you can start your own: but make sure you understand that you’ll be giving up the benefit of employer contributions.
If having checked the status of your workplace pension, you’re not that impressed by how green it is, or whatever ‘greener’ alternative funds the provider may offer, why not just take control and switch to one of the leading green pension providers?
Well you can. But it’s very important you realise that if you go ahead and make this major change you could be giving up the contributions to your current pension that your employer is making.
Warning: If you have a Defined Benefits pension, you will also miss out on other very important benefits. You will need to get advice from a qualified financial advisor if you want to proceed.
About employer contributions
Your employer has a legal obligation to contribute to your pension to ensure that 8% of your salary is paid into it each month. Your company must pay at least 3% of your monthly contribution – you pay the remainder, with the government helping a little as well through tax relief. Indeed some employers will put in more, topping up your contribution by more than 3%, or matching any additional contributions you decide to make. You can read the details on the Government’s Workplace Pensions website.
Greening your workplace pension
Even if you’re not too impressed by the green credentials of your workplace pension there are things you can do to improve it without giving up on the advantages of employer contributions.
You can switch to a greener option offered by the same provider – if available. Your employer will continue to contribute in exactly the same way as with your current option.
Or you can open a personal pension and start paying into it alongside your workplace pension, thereby giving you access to the full range of sustainable pension plans on the market (but bear in mind personal pensions come with their own, sometimes higher, fees). You may even be able to transfer money from your workplace pension every so often – perhaps every three months – to your personal pension. You will need to check whether your workplace pension allows this, and, if so, whether there are any withdrawal fees. But if so, you can steadily take control of the pension money generated through your current job.
Even if you’re really not at all happy with the green options your workplace pension offers, bear in mind that the momentum towards green investment is now so strong that even the slowest moving pension providers are recognising that they must change. So why not take action as we propose on this site to argue that they should move faster, before making a big switch away to another provider.
Whatever you decide, before making a move we strongly suggest contacting the free Government Pensions Advisory Service for good impartial advice.