Hey guys, sorry to revive an old thread but i am an employer and my dad is an accountant and I figured I would help you out a little:
The pensions in the workplace scheme have been brought into place because of low state pensions and people not being set once they have retired. If you go onto workplace pensions it will tell you your retiring age, for someone like me at 27, im looking at 70 before I receive my state pension! Although I can retired whenever I like (hopefully 30 ha)
For my employees I had to host a seminar where I invited someone from workplace pensions, my company is only small (10 people) which is why you may have heard about this in 2014 if you work for a medium/large company. In this seminar they should explain how the pension scheme works.
The whole premise about you "losing all your pension" because it is an investment is true, however if you are sensible, you won't lose any. In the government scheme you decide where your money is put. For example you can put it into shares, you have a high chance of losing a lot, or winning a lot. Or you can put it into a cash reserve, which will not be touched. The whole point of it being an investment is that whichever broker is working with your money will make it more, and yes this is not the case sometimes, but you are able to allocate your workplace pension as you see fit. The whole thing about people losing their pensions was because of the recession and stock market crashes... that's not likely to happen now we're out of the EU!
You can put 5% into shares and the other 95% into a cash reserve which gives you the security of knowing you can only really lose 5%. And you can do this anytime you want. If you log in to see your share money has gone up, take a bit of it out and put it into your cash reserve! You have the right to access it at any time and move the money around, you just can't take the money out until you declare yourself retired. You will get this money, just not state pension until the government sees fit.
Having a private pension on top is also absolutely fine. They are classed as investments and just like owning more than 1 property... you can have multiple. You must declare this though, otherwise you will have a feud with the tax man. I highly recommend having 2 pensions, just in case 1 goes tits up! Remember the loss may be higher in a private pension. It's good to look around.
To give you a little idea on how they work, if you pay in let's say £10 per month. And there are 1 million people in the U.K. also paying in £10 per month. The company will take the combines figure of £10million and invest that into property/businesses/stocks etc, thus in 20 years the return will be higher and your pension goes up. Using your money they make their pot bigger. It's not the same as you investing £10 into shares and seeing £11... these guys trade with billions and you are a small cog in a big wheel. But, workplace pension brokers are vetted by the government so you know it's not some backstreet company trading in eggs...they will be gutting properties and building materials etc...
As an employer, anyone that opts into the scheme, I have a minimum to match it up to 1% of their salary for the first year, 2% for second, and 3% thereafter. Some employers, like myself have said if you do 5%, I will also do 5%, but it's optional and if my cash flow suddenly dies and I lose a lot of business I can drop it to the above.
If you don't want a private pension and don't want the hassle of maybe losing everything, just open an ISA and put money in. The good thing about workplace pensions is your employer also puts money in! So you effectively double your pension. Private pensions run more risk because it's just your money and you may lose it all.
Hope that helps, if you have any questions feel free to ask away.
