Usdaw believes occupational pensions are an essential part of a worker’s employment package, in fact pensions are deferred wages.
Occupational pensions involve contributions from both employee and employer (tax relief is also given) and are built up over a worker’s career to provide a reasonable level of income in retirement. In some circumstances workers can take their pension with them if they change jobs. If this option is not available those pension contributions are held (and protected) until the worker retires or reaches the age of 55. If a worker moves to a new job they should enrol in their new company’s pension scheme.
This type of pension is different to the State Pension that an employee pays, subject to earning criteria, via their National Insurance contributions.
The State Pension offers a minimum income in retirement from the age of 65, although this is going up to 67 from 2026.
Most Usdaw members will be in an occupational pension already or will be automatically enrolled once they have been with their employer for no more than three months, are aged over 22, and earn over a certain limit.
Recent changes to the law on pensions contained in the 2014 Budget also give employees, subject to certain conditions, access to their occupational pension from age 55.
There are various types of occupational pensions including money purchase (defined contribution), career average, and final salary (defined benefit).
The pensions industry has seen massive changes in the last 15 years with many occupational pensions being wound up or substantially changed. However, auto-enrolment has also made a big difference by bringing in many workers, who may have previously missed out, into occupational schemes.
Usdaw is keen to promote pension membership and its reps often run pensions awareness days to inform members of their options. The Union also has a home study course on pensions that is available to any member.
Usdaw has its own pensions section at its head office in Manchester where experts are available to provide information to members.
Members should not be conned in to accessing their pension pot before they reach 55. This is illegal and can result in members losing all or most of their pension pot to unscrupulous so-called ‘pension liberation’ companies.
Usdaw also wants to see further reform to the pensions industry particularly a reduction in the fees charged by pension providers and other administrative charges or ‘hidden’ fees.