Your Pension Options

Occupational Pensions

Many employers have an occupational pension scheme for their employees. This is sometimes called a company or ‘works’ pension. It may be:

  • a salary-related scheme, which provides a pension that depends on the number of years you belong to the scheme and your earnings; or
  • a money purchase scheme, which is a scheme where contributions are invested and then used to buy a pension when you retire.

You should ask your employer if they have an occupational pension scheme and what sort of scheme it is.

If you join your employer ‘s occupational scheme, your employer pays money into the scheme and you usually pay money in as well. You will normally get tax relief on your contributions. Occupational pension schemes often provide other benefits, such as:

  • a pension to your husband or wife when you die (and sometimes to your partner if you are not married); or
  • a pension if you become ill or disabled and have to retire early.

Should I join my employer ‘s occupational pension scheme?

Most members of an occupational pension scheme will be better off when they retire than they would be if they had not joined it. This is because most employers pay something towards an occupational pension on top of the payments you may have to make. Generally, this means you will get a bigger and better pension than you could get for the same money anywhere else.

Occupational pensions are usually a very good deal, so if your employer runs an occupational pension scheme, check it out carefully when you are looking into your pension options. If you are in any doubt, get as much information as you can (for example, by reading information from the scheme provider or by talking to a union representative or financial adviser) before you decide.

What if I work part time?

If you work part time and your employer has an occupational pension scheme, you should normally be allowed to join it.

Stakeholder and personal pension schemes

Depending on your circumstances, you should think about contributing to:

  • a stakeholder or personal pension contracted-out of the additional State Pension; or
  • a stakeholder or personal pension on top of the additional State Pension.

If you ‘re thinking of a stakeholder or personal pension, the most important question is whether it is the best arrangement for you.

Stakeholder pensions are described in more detail separately. If you have already joined, or are thinking of joining a personal pension scheme, you should ask the scheme provider whether it will be easy and cheap for you to transfer to a stakeholder pension (or other pension) if this is better for you.

Remember, if you are not sure what is the best choice for you, get further help.

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