In its simplest form, a pension is an income that you receive when you retire, from the pension pot that you saved into during your working life. To encourage us to save enough for our retirement, the government provides tax relief on contributions and incentives on the way the eventual fund is taxed.


Basic State Pension

The value of the Basic State Pension is fairly low, and not everybody qualifies for a full entitlement. You have to have made a minimum level of National Insurance contributions to receive benefits.

You can obtain a State Pension forecast to see what you’re entitled to by submitting a BR19 form to the Department for Work & Pensions. Alternatively, it can be checked online at If it looks like you’re not going to get a full State Pension, you can top up your National Insurance contributions to make up for lost time.

However, most people can’t rely solely on the Basic State Pension, as it’s unlikely to provide all the retirement income you’ll need. The full State Pension entitlement is currently £179.60 per week (£9, 339.20 per year).

Occupational pensions

There are two main types of occupational pension scheme: defined benefit (sometimes known as final salary) and defined contribution (also known as money purchase).

Defined benefit schemes

Defined benefit company pensions pay you a retirement income based on your final salary (or an average of your salary for the last few years of your employment) and period of scheme membership. Typically, the benefits will involve a lump sum and an income for life. There are often a number of useful add-ons, such as a pension for your spouse, if you die before them.

For access to more information, download our fact sheet below. 

Download our fact sheet

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