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Private pensions

A private pension is a way of saving money for your retirement. These may be partly or fully funded by your employer, or you may simply pay into them yourself. You can have a private pension in addition to your state pension.

There are a number of different types of pension available, which may be arranged through your employer or by yourself.

Final salary pensions

These pensions (sometimes also called 'defined benefit schemes'), are largely funded by employers, though staff sometimes have to pay into them as well. You will receive a percentage of your salary at the level it was before you retired, or left the employer, as an annual income. Exactly how much you will receive will depend on how much your salary was, and how long you worked for the employer.

Standard pensions

This is where you and/or your employer make regular monthly payments to a pension company, who will invest the money until you hit retirement. The amount you receive will depend on how much you and/or your employer paid in, and how well the investments performed.

Stakeholder pensions

These are similar to standard pensions, but have lower and more flexible minimum contributions, capped charges and a default investment choice so you don't have to make decisions about where your money is invested. The amount you receive will depend on how much you and/or your employer paid in, and how well the investments performed.

Self-invested personal pensions (SIPPs)

This is the DIY version of a pension, which allows you more control over how your money is invested (usually with the help of a financial advisor or investments company). The amount you receive will depend on how much you paid in, and how well the investments performed.

 It is always best to consult a financial advisor before making decisions about money and investments. Factors to consider include how much you are earning, the age at which you'd like to retire, whether you have any dependents, and how much income you would like to live on after retirement.

Millions of workers are being automatically enrolled into a workplace pension by their employer. Once you're enrolled, not only will you pay in to it but so will your boss and the government.

Find out more on the government's Workplace Pensions website.

The Pensions Advisory Service website and telephone service offers comprehensive, free and impartial advice on all aspects of setting up and making the most of private pension schemes.

The government's new PensionWise website offers information on all issues relating to occupational and private pensions.

The Money Advice Service website provides information on pensions and retirement. have a key facts guide on pensions and retirement saving.

Your local Citizens Advice Bureau (CAB) can assist you in seeking out specialist advice on pensions from the national PensionWise organisation:-