Information about Occupational Pension Schemes
An occupational pension may also be known as a company pension, works or superannuation pension.
It is run by an employer on behalf of employees to provide them with an income in retirement. In most cases, a group of trustees oversees the pension fund rather than the employer themselves. The employer and employee will normally make contributions to the plan.
The government is trying to encourage more people in work to save for their retirement, with automatic enrolment in a pension scheme for eligible workers being introduced from 2012.
Occupational pensions are likely to be one of two types: defined benefit schemes (such as final salary schemes) or defined contribution schemes (such as group stakeholder or group personal pensions).
- Defined benefit schemes can be final salary schemes partly based on an employee's final salary or a scheme based around average career earnings.
- Defined contribution occupational pension schemes include money purchase schemes, group stakeholder plans and group personal pensions. The value of these pensions depends on the level of contributions and the performance of the investments made. The annuity rate will also determine the level of retirement income from the pension fund.
Other types of pensions include personal pensions and Self Invested Personal Pensions (SIPPs) which can allow investors to pool their pension savings and control how those investments are made.
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