You may have one or more workplace pension schemes that you’ve built up during the course of your career. You may also have built up benefits through personal pensions.

Understanding the pension benefits you already have is key to planning for your retirement.

State Pension

The State Pension is a regular payment from the Government that most people can claim when they reach State Pension age.

Personal pensions

Personal pensions are pensions that you arrange yourself. There are three types of personal pension – standard personal pensions, stakeholder pensions and self-invested personal pensions (SIPPs).

Personal pensions are a type of defined contribution (money purchase) pension. Some employers offer personal pensions as workplace pensions.

You build up a pension fund by investing your and/ or your employer’s contributions with an insurance company and use that fund to provide an income in retirement. The amount of money in your fund when you retire will depend on how much has been paid in and how the fund’s investments have performed.

Workplace pensions

A workplace pension, sometimes known as an ‘occupational’ or ‘company’ pension, is set up by an employer to provide retirement benefits for its employees. The most common types of workplace pension are defined contribution (money purchase) and defined benefit (final salary) schemes.

With a defined contribution scheme, you and/ or your employer make contributions to the pension during your period of membership. The contributions build up, along with investment returns to provide you (the pension scheme member) with a pot of money that you later use to generate a retirement income.

A defined benefit pension pays a retirement income based on salary, length of employment and a calculation made under the rules of the pension scheme. The retirement income from a defined benefit pension is guaranteed for life and does not depend on investment performance.