Deciding on your options

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

– occupational final-salary related schemes – offered by some employers;

– occupational defined contribution schemes (also called money purchase pensions) – offered by some employers; and

– stakeholder pensions and personal pensions – offered by some employers, or you can start one yourself. You may also be offered a group personal pension at work. These are also money purchase pensions.

If you work for a business employing fewer than five employees, your employer does not have to offer you access to a pension scheme. The government is planning changes that will mean all employers will have to offer and contribute to a pension in future.

Employers who haven’t offered a pension in the past may set up their own scheme, or may pay pension contributions into a new central scheme that is being set up. This is expected from 2012.

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

– your employer normally contributes; and

– 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, also;

– 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.