Pensions

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3. Company pension schemes

Membership of a good company pension scheme is worth its weight in gold and represents your most important benefit after the salary itself.

There are two main types of company scheme:

1. Money purchase schemes
   These provide a fund at retirement which is used to buy an annuity. These are similar to personal pensions.
2. Salary-linked schemes
   Most employees belong to schemes that link the pension to the salary. In this case, the maximum pension is two-thirds of your salary at retirement (restricted for some higher earners). However, many companies have phased out these schemes for new employees.

You can pay up to 15% of earnings (also restricted for some higher earners) into your company scheme but most employees pay 5-6% of annual salary and the employer pays a variable contribution to ensure the scheme can meet its liabilities.

These schemes also provide other important family protection benefits, for example:

• Death in service and death in retirement lump sums of up to four times annual salary
• A widow's or widower's pension
• Dependent children's pensions
• Disability pensions

Qualifying companies are now also obliged to recommend a stakeholder pension scheme. Employees are not obliged to join the scheme, and any employer contributions are optional.

1. Don't rely on the state scheme! 2. Private pensions: your most tax efficient investment 3. Company pension schemes 4. How to top up your company pension 5. Factors when topping up a company pension 6. What if you change jobs? 7. SSASs for small companies 8. Personal pensions 9. Value for money personal pensions 10. Aim for a balanced pension portfolio 11. How much can you invest in a personal plan? 12. Choosing a fund 13. Personal pensions with greater investment scope 14. Use your plan to get out of S2P 15. Do you need an adviser? 16. Conclusion

• Pension Power