Group pension plan

This is a catch all term that is used to describe several different types of pension schemes that companies, or organisations might use to provide you as an employee with a pension. The term typically covers the following types of scheme:

• Defined benefit or final salary scheme:
  Your future retirement income from the scheme will be guaranteed. The amount you receive is based on how long you’ve worked for your employer and a calculation based around your salary.
• Defined contribution or money purchase scheme:
  When you retire your pension is dependent upon how much you and your employer pay in, and how well your invested savings have grown over the years.

What’s the benefit of a group pension?

Effectively, in a group pension it’s the fact that you’re all stronger together rather than apart. The charges and fees you pay are almost always lower. It’s also easier to keep you informed about your scheme, the investments and how they’re performing. Many schemes will provide access to financial advice to help with your retirement planning.

What happens if I leave my job?

Your employer will typically provide your options. For personal pension arrangements including auto-enrolment schemes your plan can stay with your provider and your employer has no further involvement. In most cases, you can continue to pay in and ask your new employer too. You also have the opportunity to transfer to your next employer’s scheme, or into a private pension.

For company final salary or certain money purchase schemes you can leave your benefits where they are until you retire, or transfer out. In all cases it’s vital to see seek regulated financial advise if you are considering a transfer. It’s especially important with final salary schemes as they provide guarantees for your retirement income.

Remember though, you’ll be auto enrolled into your new employer’s scheme and it’s usually best to stay part of that in crowd!