Finance glossary
Workplace Pension
Also known as: Company pension, Occupational pension
In simple terms
A workplace pension is a pension your employer sets up for you. You pay in from your wages, your employer adds money too, and you get tax relief on top.
On this page
What does workplace pension mean?
A workplace pension is arranged by your employer to help you save for retirement. Thanks to automatic enrolment, most employees are put into one automatically and both they and their employer contribute.
Most modern workplace pensions are “defined contribution”, where your pot depends on contributions, investment performance and charges.
How a workplace pension works
A percentage of your pay goes in each payday, your employer adds their share, and tax relief is applied. Under automatic enrolment the current minimum total is 8% of qualifying earnings, of which at least 3% comes from the employer.
The money is invested, usually in a default fund, and you access it from the normal minimum pension age.
How could this affect me?
The employer’s contribution is effectively free money towards your retirement, so opting out means giving that up. Small increases to your own contribution, especially early, can make a big difference over a career.
You can usually leave (opt out), but you would lose the employer contribution and tax relief on those payments.
Things to watch out for
- Opting out means losing your employer’s contributions and tax relief.
- The default fund may not match your own risk appetite — you can usually change it.
- The pot is invested, so its value can go down as well as up.
Know your rights
- Under automatic enrolment, eligible workers must be enrolled and employers must contribute (The Pensions Regulator / GOV.UK); the current minimum total is 8% of qualifying earnings (at least 3% employer).
- Contributions receive tax relief and the pension grows free of UK income and capital gains tax.
- You can opt out, and complain via the Financial Ombudsman Service or The Pensions Ombudsman.
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- GOV.UK, Workplace pensions (opens in a new tab). Accessed 22 Aug 2026.
- The Pensions Regulator, Automatic enrolment — contributions (opens in a new tab). Accessed 22 Aug 2026.