What’s a Gold Plated Pension, and how do I know if I’ve got one?


Step 1 of 10 step pensions

The first thing to say about “Gold Plated Pensions” is that they are not as glamorous as they sound. They are not adorned with Swarovski crystals, or gilded in glitter but are simply one of the oldest ways of a company giving a pension to its workers.

“Gold Plated Pensions” are also called Final Salary, or Defined Benefit schemes and were the main type of pension used by large companies and the public sector until recently.  The name “Gold Plated” comes from the fact that these type of pensions are often more generous than other types and some of them have guarantees attached to them.  However, as the BHS story and others have shown, things can go wrong!

The chances are, if you are a teacher, NHS worker, member of the fire service, police or other large company and started work a while ago (exactly when will depend) you may have a gold plated pension or some gold plating in your pension. They are, therefore, more popular than we realise.

But what is a gold plated pension?

Basically, it is a promise from your employer to pay you cash after a certain age. It doesn’t matter how much you save as the cash payments you will get depend on other things (how much you earn and how long you worked for). If there isn’t enough money when you decide to cash in, that’s your employer’s problem not yours -hence the “Gold Plated” label.

Most people DO need to pay into these schemes though and if you’re lucky enough to be in one of these schemes your employer will be taking, or will have taken, money from your salary to cover part of the cost. Don’t worry – they will also have been putting money in as well so these pensions are usually a pretty good deal!

Another part of the “Gold Plating” in that when the payments start from these schemes they normally go up each year to keep pace with the cost of living. Again a pretty valuable thing to have!

Top tip: If you think you may have one of these types of pension, even if it’s from a job you have left in the past make sure your employer (or ex-employer) knows where you live. That way you will get all the information you need and not miss out on anything.

Every year thousands of pensions go unclaimed because people haven’t told their old employer that they have moved.

If you’ve lost details of your old employer then the Pension Advisory Service may be able to help.

It’s an easy thing to update your contact details and could make all the difference to your finances later in life!