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People's Pension - how it works

Your company may use People's Pension as a way of saving for retirement. Here's what you need to know about how it works and its charges.

In this article
What is People’s Pension? How do master trusts work? How much can you pay in via People’s Pension?
What are People’s Pension fees? Can I transfer my pension with People's Pension? Where can I invest my pension with People's Pension?

What is People’s Pension?

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 'People's Pension', this is what you're paying for. 

 People’s Pension is technically called a 'master trust' and is operated by not-for-profit organisation B&CE. This guide explains how 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 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 People’s Pension for you. 

Like all other workplace pension schemes, you’ll receive tax relief on pension contributions from the government.

Period Employer minimum contribution Staff contribution Total minimum contribution
6 April 2018-5 April 2019 2% 3% 5%
6 April 2019 onward 3% 5% 8%

What are People’s Pension fees?

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.

Can I transfer my pension with People's Pension?

Transferring out

You can transfer your pension money away from a 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. 

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 People's Pension?

There are three main investment choices with 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.

 

Balanced

 

This contains a mixture of equities (meaning shares), property and gilts and corporate bonds.

The vast majority of this fund is invested in equities. The split is as follows:

  • 66% in equities
  • 20% corporate bonds and gilts
  • 7% in property
  • 7% in infrastructure

 

Cautious

 

This fund is considered to be slightly less risky, with more invested in gilts and corporate bonds, and less in equities (or shares). The split is as follows:

  • 40% in gilts and corporate bonds
  • 60% in equities

 

Adventurous

 

This is the riskiest option, as the entire fund is up of equities (or shares). We've broken down where this invests. 

  • 25% UK shares
  • 25% US shares
  • 25% European shares
  • 12.5% Japanese shares
  • 12.5% Asia Pacific equities

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