Planning for your retirement years

There are three types of non-State pension. Some are offered by employers and some you can start yourself. They are:


- Occupational Final Salary Schemes – offered by some employers

- Occupational Defined Contribution Schemes (also called Money Purchase Schemes) – offered by some employers

- Stakeholder Pension Schemes and Personal Pensions – offered by some employers, or you can start one yourself. You may also be offered a group personal pension at work (also called Money Purchase Schemes).

If you work for a business employing fewer than five employees, your employer does not currently have to offer you access to a pension scheme. However, the government is planning changes that will mean all employers will have to offer and contribute towards a pension in the future. From 2012 employers will need to automatically enrol their eligible workers into a qualifying pension scheme and make contributions to it. Employees will be able to opt-out of their employer’s scheme if they choose not to participate.

Workers who give notice during the formal opt-out period will be put back in the position they would have been in if they had not become members in the first place, which may include a refund of any contributions taken following automatic enrolment.

Although you don’t have to join any pension scheme offered through your employment, it usually makes sense to join an occupational pension scheme if it’s available because:

- your employer normally contributes

- often you also receive other benefits, such as life insurance which pays a lump sum and/or pension to your dependants if you die while still in service; a pension if you have to retire early because of ill-health; and pensions for your spouse and other dependants when you die.

Not all pensions offered by employers are occupational pensions. Your employer may offer a Stakeholder Pension or a Personal Pension through a Group Personal Pension arrangement. These pensions are not called occupational pensions, even though the employer may contribute.