Occupational pension – definitions

An occupational pension scheme is a retirement savings plan provided by an employer for its employees. Staff who are members of a company pension plan benefit from a favourable income tax and national insurance (NI) break on contributions. The defined benefit plan (final salary) used to be the most popular scheme on offer, but now stakeholder, group personal pension (GPP) and money purchase (all defined contribution schemes) are becoming more popular; while there is some interest in career average and hybrid pension arrangements.†

The pension scheme is a key benefit for employees in the UK, and by 2012 all companies will have to auto enroll all staff into some sort of pension arrangement, or use the incoming National Savings Pension Scheme (NPSS) also known as personal accounts.

Added years

Additional voluntary contribution (AVC)

Annuity

Bond funds (corporate bonds and gilts)

Cash funds

Company pension scheme

Contract-based pension

Contribution holiday

Default investment option

Defined benefit scheme (DB)

Defined contribution scheme

Equity funds

Ethical funds

Final salary pension scheme

Group personal pension (GPP)

Hybrid scheme

Lifestyle funds

Managed funds

Money purchase pension

National pension savings scheme (NPSS)

Occupational pension

Overseas funds

Personal accounts

Pension protection fund (PPF)

Property funds

Specialist funds

Stakeholder pension scheme

Trust-based pension scheme