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.
Group pension plan principles
- You can pay pension contributions into your plan, and subject to certain rules the government puts some money in as well via tax relief. Your employer generally contributes to your plan.
- The amount of retirement income you receive from your pension depends on the type of scheme you’re a member of. Generally, the longer you’re a member the more you could expect to receive.
- If you’re over 55, most schemes allow you to choose when to take your money. A check of the rules of your scheme is always a top tip.
- If you’ve got a partner or dependants, then it could be possible to use your pension to take care of them if you die first.