Workplace pension

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"There's nothing more important than you and your family's future. We're lucky enough to live in a country where the state provides a pension. However, depending on how old you are now, you probably won't be able to access this until you're 68. And even then, it probably won't be enough on its own for a comfortable retirement.

If you qualify, the government pays you a State Pension. The amount you receive changes each year and depends on the National Insurance contributions you made while you were working.

Once you reach retirement, you’ll still need money to pay for food, housing, bills, health and transport – and that’s before you pay for those retirement dreams. Depending on your lifestyle in retirement, the State Pension is unlikely to be enough to cover the things you need – or want – to pay for.

Enter your workplace pension. This is separate to the State Pension – so is in your control, not the government's – and can help cover any shortfalls in your monthly outgoings. So your workplace pension is something worth paying attention to. In simple terms, there are three stages.

You pay money in, that money is invested, and then you take it out. Not that complex. To be in with the best chance of a comfortable retirement, your total pension contribution should be around 15% of your salary, although the later you start the more you’ll need to save.

But don’t worry, you'll get a helping hand getting to this number and the best bit is that your employer pays money into the pension too. And that's extra money you wouldn't otherwise receive. And as a reward for the relatively small amount you pay in from your salary, the government doesn't tax you on the amount you put in. So by not having a pension, you say goodbye to that free money from your employer and you end up paying more tax!

Let's see how that works. If you're a basic-rate taxpayer, for every £100 you get paid, the government deducts basic-rate income tax. However, if you pay £100 into your pension, the full £100 goes in, so you’re better off. And if you're a higher-rate taxpayer, the savings are even better. You may also save on National Insurance depending on how your pension is set up. But remember tax rules can change and benefits depend on your circumstances. This pot of money is invested so it can hopefully grow over time, though remember that investments can fall as well as rise in value so you could end up with less than you put in.

If you don’t choose an investment yourself, your pension will be invested in a default option, chosen by your employer. However, you might find that there are other investments better suited to your own personal circumstances and Hargreaves Lansdown can help you with choosing these if you wish. At the end of the day, the better your investments perform, the more money you'll have when you retire so it's important to make sure they're right for you.

You won't be able to access the money in your pension until you turn 55 or 57 from 2028, taking away the temptation to spend the money before you reach retirement.

But once you've reached this age, the rules are flexible. You can take as much or as little from it as you like, to support the lifestyle you want. How much you take will affect how much you get taxed. We’ll contact you with details on how this works closer to the time, or you can watch our retirement video.

So you see pensions don't have to be complicated."

This video is not personal advice. All investments and income can fall as well as rise in value, so you could get back less than you invest. If you are unsure of the suitability of an investment or course of action for your circumstances, please seek advice. Past performance should not be seen as a guide to the future.