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Which are the most common pension schemes for your occupation?
When it comes to pensions there are a range of different options for you to choose from, each have their own benefits and disadvantages. The most common pension schemes that are available are:
State Pension – This is the basic pension available to anyone who has enough National Insurance Credits. This option provides a minimum scheme that will allow you to provide for yourself when you retire.
SERPS - State Earnings Related Pension or second state pension SERPS is paid on top of the basic pension and is based on your earnings from 1978 to 2002. All employees have to contribute towards additional pension unless they make alternative arrangements by contributing to an occupational or personal pension scheme which is contracted out of additional pension.
Occupational Pension - Occupational pension schemes are designed to provide pensions and life assurance benefits for employees, these schemes can see a range of benefits, including lump sum payments and a good level of employer contributions.
Personal Pension - Anyone can take advantage of a personal pension scheme, these schemes are provided from such institutions as banks, building society’s, life insurance firms and financial regulated organisations.
Stakeholder Pension - This type of pension is very similar to a personal pension scheme, the main difference being it can offer a greater degree of flexibility. A stakeholder pension scheme can be offered by your employer of financial institution.
Teachers Pension - The Teachers Pension Scheme is a contributory scheme administered by Teachers' Pensions on behalf of the Department for Children, Schools and Families. It is a defined benefit ‘final salary' scheme and is one of the most important and valuable benefits available to teachers. The TPS not only provides you with a lump sum and regular income after you retire but also provides your family or other dependants with financial protection after you die.
Government Pension - The Local Government Pension Scheme is available to the vast majority of employees employed within the local government sector. This type of pension scheme sees a good level of bonuses offered to its members, as well as the option to take a lump sum payout on retirement, the employer also pay a good percentage into the employees scheme. The Local Government Pension Scheme has seen some major changes in recent times, with more changes set to come into force over the next few years, although at present the popularity of the pension scheme with public sector workers has been great, employees are looking at other pensions which are offered on the general marketplace.
Armed Forces Pension Scheme – At present there are two types of armed forces pension schemes on offer to current serving and time served personnel. These are known as AFPS 75 and AFPS 05.
The armed forces pension scheme offers enhanced benefits in terms of lump sum payouts in the event of death during duty, the spouse would receive this amount and any pension attributed to it. This type of pension is complex in its nature and as such has been reviewed and been subject to considerable press coverage since 2007 to present date. Before entering into this scheme it is advisable to discuss these complexities with your pension advisor.