Many employers have an occupational pension scheme for employees. This may be:
- a salary-related scheme (where your pension depends on the number of years you work and your earnings when you retire); or
- a money purchase scheme (where contributions are invested and used to buy a pension when you retire).
You should ask your employer if they have a scheme and what sort it is.
If you join your employer's occupational scheme, your employer pays money into the scheme and you usually pay as well. You will normally get income tax relief on your contributions. So, for example, of your contributions, every £100 that goes into your pension costs you only £80 (if you are a higher rate taxpayer there are additional savings still). When you retire, you will get a pension in return for the contributions you and your employer have made.
Most members of an occupational pension scheme should be better off in retirement than they would have been if they did not join the scheme. So, in most cases you will get a bigger and better pension than you could get for the same money elsewhere. But there are exceptions. For example, if you change jobs frequently (at least every two years or so), it might be worth thinking about other pension arrangements.
We can provide you with guidance as to how best to utilise the options open to you.