Different types of pensions

Understanding different types of pensions

A pension is the savings you make to support yourself in later life.

You may have set up a pension for yourself or have received one from your employer or past employers. There are three main types of pension in the UK, and you can have more than one kind if you wish. The three types of pension are the State Pension, workplace pensions and personal pensions.

State Pension

The State Pension is a regular payment from the government most people can claim when they reach State Pension age. Your state pension depends on when you were born. You can find out your State Pension age by using the calculator on the GOV.UK website. The amount you’ll get depends on how many ‘qualifying years’ of National Insurance payments you have made. You can get an estimate of how much State Pension you could get on the GOV.UK website.

Workplace Pension

A workplace Pension is as it sounds, a pension organised through an employer. Under Auto Enrolment legislation is it now compulsory for employers to set up a pension scheme for eligible employees. An employer must make a minimum contribution, as must an employee.

Personal Pension

A personal pension is a type of defined contribution pension where you choose the provider and make the arrangements for your contributions to be paid. If you haven’t got a workplace pension, getting a personal pension could be a good idea for saving for retirement. There are Defined Contribution Schemes, Defined Benefit Pension Schemes and Self-Invested Personal Pensions.

You can find out more about the different types of pensions in our Guide to Retirement Planning.

Start planning for your future, today

Retirement planning is a long-term commitment, so it’s essential to incorporate regular reviews of your arrangements to make sure that they remain on track and are meeting your needs. To find out more or to discuss how to maximise your retirement opportunities, please contact us.

A pension is a long term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.