Occupational

Occupational / Company Pension Scheme (OPS)

These are employer sponsored schemes with trustees who are responsible for the schemes being run properly, legally and fairly. If your employer has a scheme it is almost always in your interest to join because of the employer contribution which is, in effect, a tax-efficient benefit.

Company pensions are set up by employers for their staff. They can be final salary also known as defined benefit schemes. Either the employer or the employee or both contribute to the scheme on a monthly basis. When the employee retires, he or she receives a pension based on earnings and length of pensionable employment.

Alternatively an employer may set up a "defined contribution" or "money purchase" scheme. In this case the monthly contributions are put into a fund earmarked for that particular employee who, when he or she retires, is able to use the fund to provide income - although there is also the valuable option of taking part of the fund as a tax-free lump sum. One common option would then be to purchase an "annuity" with the balance.

Annuities are sold by pensions providers and insurance companies and guarantee the policyholder an income throughout his or her retirement.

OCCUPATIONAL PENSION SCHEMES ARE REGULATED BY THE PENSIONS REGULATOR

A PENSION IS A LONG TERM INVESTMENT, THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN. YOUR EVENTUAL INCOME MAY DEPEND UPON THE SIZE OF THE FUND AT RETIREMENT, FUTURE INTEREST RATES AND TAX LEGISLATION.

INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM TAXATION, ARE SUBJECT TO CHANGE.