employers' pension schemes

There are three main types of pension scheme generally available through the workplace – occupational schemes, group personal pensions and stakeholder pensions. There a number of major differences between them.

Occupational schemes are set up and organised by your employer. Your employer contributes to the scheme and in most cases you’ll be expected to make a contribution too as part of the deal. You don’t have to join your employers’ scheme but as your employer makes contributions on your behalf you could be giving up valuable benefits.

As part of its pensions reform package, the government is introducing a system of ‘auto-enrolment^*’ where your employer will automatically sign you up to the scheme and you will have to opt-out if you don’t want to belong to the scheme.

With occupational schemes, the contributions made by your and your employer on your behalf stop when you leave the employer. You stop being an ‘active’ member of the scheme and become a deferred member^*. The other types of scheme are ‘personal’ pensions which means you can carry on paying into the scheme if you want to even if you leave the employer.

Occupational schemes are regulated differently to group personal pensions and stakeholder schemes. In addition, occupational schemes are overseen by trustees who are responsible for running the scheme and ensuring that employers meet their obligations to the scheme. Group personal pensions and stakeholder schemes do not have this same type of protection.