How Usdaw can help young workers
We can provide help and guidance on a range of pension issues, which is free to all Usdaw members.
Let’s face it when we are younger pensions is a subject, we tend not to pay too much attention to but the earlier you can start to pay into a pension the better the outcome will be.
Right now we are in the middle of the worst cost of living crisis this country has ever seen. The important message for all our members is to simply stay in your scheme if you can afford to.
We have a free homestudy course on pensions for members, and you can choose from 4 different modules find out more here.
Two of the most frequent questions we receive from young people are noted below: -
What happens to my pension payments?
Most of us will now be in what is known as a Defined Contribution pension scheme.
Generally, your money is deducted by your payroll department and sent over to the pension provider looking after your workplace scheme.
When a group of young people were surveyed recently, they believed their pension pot was the same as a savings account, however, a pension is much better as your employer will also pay a contribution on your behalf, and you receive some generous tax concessions-including a contribution from Government known as tax relief and your money will also grow tax free.
Some companies will also pay more into your pension pot if you are also able to increase your monthly amount, it pays to find out what is on offer and what the process is.
When your money is transferred from your salary into your pension pot it is then invested by the pension provider.
How is my money invested?
With workplace pension schemes nowadays, you are often given the choice as to where the money in your pension pot is invested.
You can if you wish make your own investment choices from a selection of different funds offered by the pension provider. If you prefer not to choose your own investment path however, you can opt for what is known as a “default fund”.
Most pension savers will choose a default fund as an investment manager will be appointed to look after your money and make all the necessary decisions on your behalf.
Government is also particularly keen for everyone -especially young people to take an interest in where their pension monies are invested. As a result, more transparency must be provided and investment companies are being held to account for “responsible investing” which must involve Environmental, Social and Governance (ESG) considerations.
Environmental considerations might for example involve a fund manager investing in companies which are supporting climate change -wind farms for instance, or companies who have made significant changes to their waste management practices. Social issues might include investing in companies which have a good track record with human rights -they might support gender diversity and labour rights for instance.
Governance will include a company’s attitude to business ethics, anti-corruption policies -and how much they pay their Executives.
We would encourage you to find out the name of the default fund(s) in which your pension pot is invested, by accessing your workplace pension provider’s website and you can often access a fact sheet which will explain where your money is invested in more detail.
If you have a pension question get in touch with Usdaw’s pension team on 0161 224 2804 or ask a question here.