The minimum amounts that can be put into workplace pensions was increased in April this year, with UK savers are encouraged to put more into their pensions to help save for their retirement.

For most workers, a company workplace pension means they can start saving for a pension – and you can start, even in your 50s. You can have a workplace pension even alongside any existing personal pension schemes. And while you can top up a personal pension, making sure you’re getting the best from a workplace pension is important.

Expert pension help – automatic enrolment rules

Under automatic enrolment rules, from April 6, the minimum amount of money that can be put into the workplace pension pot by employers and staff increased from 5% of qualifying earnings to 8%. Within the new 8% rate, at least 3% must be paid by the employer, with the remaining 5% made up by staff.

Automatic enrolment started in autumn 2012, amid concerns people were living for longer but not saving enough for their later years. “Automatic enrolment is approaching its seventh birthday. In its short life, it has already brought a quiet revolution to pensions in the UK,” says Alistair McQueen, head of savings and retirement at Aviva.

Expert pension help – 7 pension myths busted

Pensions are not always easy to understand, though, and there’s still a lot of confusion around them for lots of people. Do you feel unsure of the facts? Here, McQueen busts seven pensions myths…

Myth 1: No one is saving into a pension pot

Automatic enrolment has introduced more than 10 million new savers to workplace pensions since 2012. There are now a total of 22 million people participating in workplace pensions in the UK, and they are all ages in a diverse range of professions.

Myth 2: Pension savings are for old people

Pensions savings aren't just for old people - both young and old can benefit from a workplace pension
Pensions savings aren’t just for old people – both young and old can benefit from a workplace pension.

Contrary to popular perception, it is the under-30s who are leading the way when it comes to saving for pensions and retirement. The good news is that all ages have seen an increase in workplace pension participation since 2012, but the under-30s have seen the biggest increase – more than doubling from 35% saving to over 79% by 2018 – which should help dispel the myth that pensions savings will only benefit the over 50s.

Myth 3: The government will pay for all my retirement

It’s true that we can expect some money in retirement from the state, but this is currently up to a maximum of about £8,500 every year per person. Today, the majority of the typical retirees’ income in retirement is from sources beyond the state, such as private pensions and other savings. Remember that other assets, such as releasing equity from your home or drawing down from savings you’ve made throughout your working life, can all be sources of income such as pension drawdown.

If you need to work out how much pension you’ll need in retirement, read the Wise Living guide to how to calculate how much you need in retirement for additional pension help.

Myth 4: I will receive my state pension from age 60 if I’m a woman, or 65 if I’m a man

Retirement age is in a state of flux so check what age you can claim a state pension.
Retirement age is in a state of flux so check what age you can claim a state pension.

These commonly referred to and long-standing ages were set decades ago, when we could generally expect a few short years in retirement. Since then, average life expectancy has greatly increased, and the age at which we are eligible for our state pension has been increasing, with women starting to qualify for their state pension at the same age as men.

The state pension age is set to keep rising too. The yourpension.gov.uk website can help you check your state pension age, but the age you will retire at does vary according to when you were born, rising to 68 in some cases.

You can get pension help and check your state pension age with the government state pension calculator.

Myth 5: I can’t retire until I reach my state pension age

You can retire when you like and access personal pensions fro age 55.
You can retire when you like and access personal pensions fro age 55.

We are free to retire whenever we want to. However, we can only really think about retiring when we feel we have saved enough money to meet our needs when we’re not working. New rules allow people to access private pensions from age 55 – but the state pension age is set by government.

As individuals, we have the freedom to choose our retirement age, but this brings with it a responsibility to ensure we can fund our lifestyle from that point onward.

Myth 6: I’m the only one who is confused by pensions

Research suggests only a minority of us feel we really understand pensions. So, if you’re feeling a bit uncertain and need pension help, you’re not alone. The great news is that more of us are saving for our future. And if you’re looking for a little nudge in the right direction, Aviva suggests three general rules of thumb that could help you be better prepared:

  1. Save at least 12.5% of earnings towards your retirement. This can include money from your employer and the taxman, and you’ll need to save over a long period of time, plugging gaps from periods of unemployment, for example.
  2. If possible, start saving at least 40 years before your target retirement age. If you start later you’ll need to pay more into your pension pot to make up the gap.
  3. Try to have built up at least 10 times your salary in your pension by the time you retire.

Myth 7: Retirement is further away than ever

Don't overlook the benefits of saving into a workplace pension and saving into a personal pension.
Don’t overlook the benefits of saving into a workplace pension and saving into a personal pension.

There’s still a collapse in workplace participation as we progress through our 50s. This represents a huge waste of talent, experience and potential. One of the strongest levers we can pull to help fund our lives in retirement is to work longer. Many employers are taking fresh steps to support a fuller working life, with the aim of ensuring that age is no barrier to opportunity.