What Are Your Pension Rights

Andrew Boast
4 min read
What Are Your Pension Rights explained by Employment Law Friend

Protected pension rights

Protected pension rights are a type of historic pension fund. In addition to the basic state pension, there was previously a second tier top up pension, called the additional state pension, although it was originally called the state earnings related pension scheme (Serps). This second pension was based on how much a person earned.

Before 2012 employees were allowed to “contract out” of this additional pension. Both the employee and employer saved on NI contributions, and instead the employee received an extra pension from their main occupational or personal pension. Although this has now been abolished, a historic protected pension will still impact on how much state pension someone will be entitled to.

They were abolished from 6 April 2012 (or 2016 for those with a defined benefit pension scheme), and no further protected pension rights have built up since then.

Does this affect me?

If you did opt out of the additional state pension, then while you will still receive your basic pension, you will get less or possibly no additional state pension, reflecting the period that you contracted out. Instead you should get pension income from your private provider, but this could be more or less than what the additional state pension might have been, depending on how your investments performed.

Can my pension be taken away from me?

Your pension is your money, the same as your earnings are.

For example, if you were later dismissed for gross misconduct, you would still be entitled to keep your full pension provision and your employer could not touch this. This is similar to the way your employer could not touch earnings you had been paid in the past.

Is it illegal for employers to not pay pension?

In the vast majority of situations both employers and employees must contribute to the employee’s pension.

Previously employees had to elect to join a pension scheme, but since 2012 many employees have been automatically enrolled in one, and the requirement to do this now applies to all employers, however small. There are still some employees who will not be automatically enrolled, including those who are under the age of 21, those who have reached the state pension age and those who earn less than £10,000.

In addition, you are only automatically enrolled if you are not already in a workplace pension scheme. You must be automatically enrolled unless you are exempt, even if you work through an agency or are on a short term contract. (If you earn between £6,240 and £10,000 you have the right to join your employer’s pension scheme, and they will then be required to make contributions, but you have to chose to join, you are not automatically enrolled in this.)

Although enrolment is automatic, you are entitled to opt out of it. If you do this, then you no longer benefit from either the employers contributions or the tax relief. If you opt out within the first month of enrolment you will receive your contributions back, but if you opt out later, then the money will be kept aside for when you retire.

Automatic enrolment ensures that employees save 8% of their qualifying earnings, usually with the employer contributing 3%, and the employee 5%. Qualifying earnings are all earnings between £6,240 and £50,270. The 5% an employee contributes includes tax relief so the actual amount the employee is “taking” from their net salary is less than 5% in order to achieve that total.

If your employer does not meet their own obligations to run and contribute to automatic enrolment, then this can be enforced by the Pensions Regulator, to ensure they pay any missed contributions. If you have any concerns that your employer is not complying with these rules, then you can ask The Pensions Regulator to investigate this.

Do you know your pension rights?

There is much more to winning your case than simply being in the right, our employment law specialist advisors know the law and legal tactics to make sure you get the best chance at a fair settlement. Get in contact with us and see how we can help.

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This content is provided free of charge for information purposes only. It does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of our company. For employment law advice please get in contact and speak to your employment law solicitors.
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