What are the different types of pension scheme?

26 June, 2019

In the UK, excluding the State Pension from the government, there are two main types of pension schemes or plans:

• Defined contribution / money purchase / personal pensions:
  These pensions can be workplace pensions or private pensions set-up by you. The value of the pension at retirement will depend upon how much money has been paid into the pension and investment performance. Investment risk is borne by you
• Defined benefit/final salary pensions:
  These pensions are usually workplace pensions set-up by an employer and the value of the pension will usually depend upon the number of years worked for the employer and your salary. At retirement you will receive a regular income (usually inflation linked) from the pension scheme for your life. Investment risk is borne by the employer.