The Pearson Pension Plan

This page looks at the different types of pensions available, how much you can save and why a pension can help you towards a comfortable retirement.

If you are a member of the Pearson Pension Plan, section specific information is included at the bottom of the page.

We have partnered with WEALTH at work to provide a programme of webinars covering a range of topics from pension basics to understanding tax and planning for retirement, as well as wider financial issues. The webinars vary in length, and all have the opportunity for you to ask questions. You will receive an email from the Plan if you are eligible to attend.

Benefits of saving for retirement

Saving for retirement offers several benefits.

• Saving into a pension scheme is a great tax-efficient way of saving, as contributions are eligible for tax-relief.
• Most employers offer occupational pension schemes where they will most likely provide a contribution on top of your monthly one.
• Saving into a pension scheme can increase your financial security during retirement to support the lifestyle you would like to have.

The different types of pensions

In the UK there are several types of pensions available. These range from the schemes set up and run by an employer, to investments that an individual will have more control over. Some of these pensions are explained below:

• State Pension

  The Government provides a basic level of income when you retire known as the State Pension. You may hear the terms Old and New State Pension, the primary difference is the age you can claim this pension. Anyone born after the 6 October 1954 will be eligible for the New State Pension and if you were born before 6 October 1954, you can already claim your State Pension.

  The State Pension is for 2024/25 is £221.20 a week. This could be less if you have not paid a minimum of 35 years National Insurance contributions or have been contracted out of the Additional State Pension.

  The State Pension is not designed to provide your entire retirement income, so it is important to also have other retirement savings.

  For more information on the State Pension a link is included below to the Government’s dedicated page.

• Personal Pensions

  These are pensions usually with an insurance company. They can be arrangements that only you pay into, or sometimes they are also used by your employer. The insurance companies charge an amount for administering your pension, which can be reflected in the unit price of the fund you are investing in, or by regular deductions from your pension. These costs continue, even if you stop paying into your pension.

• Self-Invested Personal Pension (SIPP)

  Another form of personal pensions. However, unlike personal pensions an individual will have more control over how their pension is invested.

• Employer (Occupational) schemes

  These are arrangements set up by your employer. Defined Contribution employer schemes invest in the same way as a personal pension but generally the employer meets most of the cost of running the pension. Your employer can often negotiate better rates with the insurance company which means that everyone pays less costs.

• Defined Contribution (DC) pensions

  A DC pension could be a personal pension or an arrangement set up by your employer. Where it has been set up by your employer, both you and the company contribute a monthly amount into a pension pot which is then invested. Your savings will be invested and available to access from your 55^th birthday (the Government intends to increase the minimum pension age to 57 from the 6 April 2028). Any investment growth is tax-free, and you will have the option to take up to 25% of your pension pot as a tax-free lump sum when you retire.

  At Pearson, the Money Purchase 2003 (MP03) Section and Auto Enrolment (AE) Section are DC pension arrangements.

• Defined Benefit (DB) pensions

  A DB pension (also referred to as a final salary scheme) is an occupational pension plan where the employer pays a pension to the member at retirement. The pension is calculated as a percentage of the member’s salary for each year they are a member of that scheme. DB pensions have become less common in recent years, being replaced in many cases by DC schemes.

The Pearson Pension Plan

If you are a member of the Pearson Pension Plan you will either have a DB or DC pension.  

The Auto-Enrolment (AE) and Money Purchase 2003 (MP03) sections are both DC arrangements that are available for current Pearson employees to join. The DB section of the Plan is closed for new employees.

You can find our which section of the Plan you are in by using the link at the bottom of the page, you will need your national insurance number to hand.

Member contributions to the Auto-Enrolment (AE) Section are fixed at 5% of qualifying earnings, with Pearson paying 3% each month.

The minimum member contribution to the MP03 Section is 3% of pensionable salary, with Pearson paying double.

Please find below some more information on your pension benefits through the Plan:  

• Pay less and save more into your pension by switching to the Money Purchase 2003 (MP03) Section

  When you start working for Pearson, you can apply to join the MP03 Section. If you do not apply, then eligible employees will be automatically enrolled into the AE Section. If you are enrolled into the AE Section, you can switch to the MP03 Section, where Pearson will double your contribution.

  If your contribution to the MP03 Section is £100 a month, Pearson’s contribution is £200, so the total paid into your pension pot in one year is £3,600.00. Whereas the same contribution for an AE member would only result in an annual contribution of £1,920.00.

  You can also save on national insurance if your MP03 contributions are made using salary exchange.

• Additional benefits of being a member of the MP03 Section

  MP03 members also have additional benefits such as a death in service lump sum, an ill-health pension and a spouse/civil partner’s pension in the event of their death. You can find more information on MP03 and details on how to join below.

  If you are a member of the AE Section, you can switch to the MP03 Section. A link is included at the bottom of the page to Pearson MyBenefits where you can switch.

• How your contributions are invested (AE and MP03 sections)

  If you are a member of the AE or MP03 sections, you will be able to choose from a range of investment options offered by Aviva. This can be accessed through their secure online portal, MyWorkplace.

  If you do not want to get involved in the day-to-day investment management of your pension pot, you can choose to invest in one of The Pearson Pension Plan’s (the Plan) lifecycle options. You can choose from one of three lifecycle options that target three specific retirement outcomes: drawdown, annuity, and cash. A lifecycle option is an investment selection process, under which contributions are invested in different investment funds at different proportions as you get closer to your chosen retirement age. Your pension pot is switched between funds at set dates.

  However, if you prefer, you can self-select the funds you wish to invest into. If you would like help to make the right investment choice for you, we recommend that you seek independent financial advice.

• Keeping track of your pension

  If you are a member of the AE or MP03 sections your pension pot will be invested with Aviva and is available to view via Aviva MyWorkplace. A link is included at the bottom of the page.

  It is important that you keep your contact details up to date so that you can keep track of all your pension benefits. A statement of your DC benefits will be sent to you each year. If you are a member of a DB section, you can request an update at any time from the pensions team.