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Pension are complicated, technical and full of jargon. Consequently there are number of myths and misleading ‘rumours’ that need to be explained.

Here are some of the most popular:

My house is my pension

Relying on your home to fund retirement is very risky in that it is unlikely to allow you to fund a comfortable standard of living over a sustained period of time.

When the time comes few people want to leave an area where they are comfortable, leaving a house full of memories, or moving to a smaller house where there is no room for the grandchildren, or friends, to stay.

Experience says people only see their home as a source of funding as a last resort. Whilst past performance is not a guide to future performance, over the past 15 years the average house price has gone up by around 77% compared to a 246% total return from the average UK stock market.*

Don’t forget as a DC member your contributions are invested plus you also benefit from tax relief and Pearson also contribute on your behalf.

* Sources: Nationwide House Price Index and FTSE All Share Index

I can’t afford to pay into a pension

It is understandable, with everyday financial pressures, saving for your pension may not be an immediate priority.

But every little helps. Paying an extra £20 per month from age 22 could boost your pension by nearly £22,000 by the time you reach State Pension Age.

If Pearson gets into financial difficulty I lose my pension

No. The Plan is managed by a Trustee body, called Pearson Pension Trustee Limited, which is a legally separate entity to Pearson the company.

This is a legal requirement and gives the Plan independence from Pearson who have no claim on the funds. This means that the Plan assets (members’ money) are looked after separately to Pearson the company. The Pension Protection Fund may also be available to provide compensation in certain circumstances. In fact, the Plan is currently considered to be one of the best funded plans across FTSE 100 employers.

If I leave Pearson I lose my pension savings

If you are a current Pearson employee and you leave Pearson in the future the Company will stop paying into your pension pot, but it belongs to you. This is your money for when you retire.

You can keep it in the Plan or you can transfer it into another pension arrangement.

However, if you leave it in the Plan please make sure you keep your contact details up to date so that we can keep you informed about what is happening with your pension plan. Simply email or call 0800 7811378.

There are millions of lost and abandoned pension savings as a result of people failing to keep their contact details up to date with past employers. The government estimate that people starting out in their career today will have an average of 14 jobs in their working lives leading to a possible 50 million abandoned pensions by 2050!

It is always a good idea to make sure that you keep a record of your previous pension savings.

We would also recommend that you regularly review your various pension savings arrangements and/or consider amalgamating them into one arrangement.

If you are not sure if you have any dormant pension(s) you can use the government’s free Pension Tracing service to find out ( - This link opens in a new browser window). All you need is the name of your old employer(s).

You’re never too young to start a pension

You may have to rely on your pension for at least the last 20 years of your life. If you don’t start saving for retirement until later in your career, there is risk that you might not have enough time to build up the pension savings you might need in retirement. Many people would simply be forced to work longer to avoid an impoverished retirement. It makes far more sense to use all your working life to save up the money to fund your retirement.

Starting early doesn’t just mean that you will save for longer. It also gives your investments longer to grow and to ride out the market’s ups and downs.

You don’t have to use your pension savings only to provide a pension income.

As pensions are designed to be a retirement savings vehicle, legislation states that you cannot access any pension pot before you are age 55.

However, thanks to the pension freedoms introduced by the Government in 2015, once you reach 55 there is now more flexibility in how you use your pension savings. For example, rather than taking an income for life (an annuity) you can now take income and lump sums in any combination you feel fit.

However, we would recommend that you seek independent financial advice to ensure that you understand the tax implications of your actions. Visit for details of the options available to you.

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