The main types of Pension

There are three main types of pension in addition to the State Pension arrangements:

Occupational salary-related schemes
Some employers set up these schemes to provide pensions for their employees based on the employee's salary and pensionable service. They are sometimes called 'defined benefit' or 'final salary' schemes. The employer contributes to the scheme and there are trustees to look after scheme members' interests. You can only get salary-related pensions through your employer.

Occupational money-purchase schemes
Some employers offer these pension schemes - they are sometime called 'defined contributions schemes'. They do not provide a pension based on your salary or pensionable service. Instead, they build up a personal pension fund that you convert into an income when you retire. Usually, the employer contributes to the scheme and there are trustees to look after scheme members' interests.

Stakeholder and Personal Pensions
These are also money purchase pensions and are the most popular choice for people who arrange their pensions privately. Financial institutions (insurance companies for example) usually run these schemes. We call them 'pension providers'.

Some employers also offer stakeholder and personal pensions to their employees.

If you are in any doubt about your pension arrangements, or you do not understand the complexities of the available schemes, then talk to us at Surrey Financial Advice. We can help guide you through the maze, get a basic understanding of your best options and help you to arrange them if required. There are now potentially quite large advantages to be gained from a pension arrangement, unlike any other form of investment in the UK, but there are also some disadvantages which you should be aware of before you make your decision. –

Remember, with Surrey Financial Advice, any initial consultation is free of charge (apart from a cup of coffee, perhaps) and you are under no obligation to proceed.   [Contact us]