People's Pension - how it works
What is The People's Pension?
The People's Pension is a type of workplace pension scheme that employers can use to automatically enrol their staff into a pension.
So, if you find that a proportion of your monthly salary is going into something called 'The People's Pension', this is what you're paying for.
The People's Pension is technically called a 'master trust' and is operated by not-for-profit organisation B&CE. This guide explains how The People's Pension works, how much you'll be charged and where you can invest your pension savings.
How do master trusts work?
A master trust is a type of defined contribution pension that can be used by multiple employers - with independent trustees who look after pension savings on behalf of all the employees who are members.
So you might find that you have the same pension as your neighbour, even though you work for different companies.
Although the major decisions are taken by the master trust, your employer can still make decisions about contributions, investments, and benefits.
Many employers have chosen to use a master trust pension scheme to automatically enrol their staff into a pension, rather than set up and run their own workplace pension scheme.
How much can you pay in via The People's Pension?
The government has set a minimum amount you need to contribute to your pension, along with a minimum that your employer should pay in.
The table below shows how much this is, and we've explained how this works in full in our guide to pension auto-enrolment
Other people, such as family and friends, can also pay into The People's Pension for you.
Like all other workplace pension schemes, you'll receive tax relief on pension contributions from the government. So the minimum employee contribution is effectively 4%.
| Employer minimum contribution | Staff contribution | Total minimum contribution | |
| Contribution | 3% | 5% | 8% |
What are The People's Pension fees?
The People's Pension levies a fixed annual management charge of 0.5%, which applies to what you have in your pension pot.
So, for every £1,000 you have in your pension, £5 will be charged each year.
However, there is a management charge rebate of between 0.1% and 0.3% depending on how much is in their pot. The rebate is applied as follows:
- up to £3,000, no rebate is given
- over £3,000 and up to £10,000, you get back 0.1%
- over £10,000 and up to £25,000, you get back 0.2%
- over £25,000 and up to £50,000, you get back 0.25%
- over £50,000, you get back 0.3%.
There is also an annual fee of £4.50. Those with less than £104.50 are not charged the £4.50.
Can I transfer my pension with The People's Pension?
Transferring out
You can transfer your pension money away from a The People's Pension fund.
If you are transferring away from The People's Pension, the pension scheme that's receiving your savings must confirm it can accept transfers in and provide the appropriate HMRC scheme reference.
There is an electronic platform to allow fast transfers called 'Origo Options'. If the receiving scheme uses this system, it is down to them to initiate the transfer.
You can also do it via paper forms which are signed, completed by your new provider and then returned to The People's Pension for the transfer to proceed.
Transferring in
You can transfer other pension pots that you might have into The People's Pension. There is no charge to do so.
It is more complex transferring a defined benefit and final salary pension than it is a defined contribution or personal pension scheme.
There is an online tool on the company's website to help you transfer. You'll need to supply the name of your previous pension provider, the policy number for the pension you want to transfer in and the approximate value of your pot.
The People's Pension will then:
- contact the existing pension provider
- request the relevant forms from the provider (if required)
- make arrangements to ensure the money is transferred
- contact the individual once the transfer is complete.
Where can I invest my pension with The People's Pension?
There are three main investment choices with The People's Pension for you to choose from. if you don't make a choice, you'll be put into the default 'balanced' fund.
We've explained what's contained in each of these investment choices below.
More proactive investors can choose from a range of eight investment funds (Ethical, Shariah, three levels of Global Investments, Pre-Retirement, Annuity and Cash).
Each has a different level of risk and savers can decide how much money to put into each fund.