Website of the UK government

Types of pension scheme

Pension schemes are a form of saving for retirement. There are several different types of scheme.

State Pension

Your State Pension is based on the number of qualifying years you have, calculated on the National Insurance contributions you've paid, have been treated as having paid or have been credited with.

You can claim it at State Pension age, which is 65 for men and 60 for women born on or before 5 April 1950 (the State Pension age for women born after 5 April is rising from 60 to 65 between 2010 and 2020) or you can choose to delay claiming it.

• Understanding the basic State Pension
• Understanding the additional State Pension

Company pension

Company pensions are set up by employers to provide pensions for their employees on retirement. If you are able to join one, it's worth considering as most people will be better off in retirement than if they had not joined.

• Understanding company pensions

Personal pension

Personal pensions are available from banks, building societies and life insurance companies. Some schemes allow you to start taking your pension from the age of 50 (increasing to 55 by 2010) and to take part of your pension fund as a tax-free lump sum payment.

Stakeholder pensions, a flexible type of personal pension, allow you to start and stop your contributions when you want.

• Understanding personal pensions
• Getting information and help with pensions

Tax relief on pensions

Most contributions to pension schemes attract tax relief. For example, for every £78 that goes into a basic-rate tax payer's personal or stakeholder pension, the government puts in a further £22. Higher rate taxpayers can claim the extra tax back.

• Tax relief on pensions - the basics

Tax-efficient savings and investments

There are several other tax-efficient ways of saving and investing money for retirement.

Individual Savings Account (ISA)

With an ISA you don't get tax relief on the contributions you make but you don't pay tax on the interest or most dividend income earned, or on 'capital gains' if you later sell the investment at a profit.

• Saving and investing with ISAs

National Savings and Investments (NS&I)

NS&I offers one of the most secure ways to save and invest money because it's backed by the government. Some schemes pay interest that's taxable, while others are tax-free.

Many NS&I schemes are long-term investments, that may be suitable for saving toward your for retirement.

• National Savings and Investments
• Tax efficient savings and investments

Investing your money

If you save your money in a bank or building society account, your funds should grow – at least enough to stay ahead of inflation.

If you want your funds to grow more quickly, you could consider investing them. Bear in mind that most investments carry a risk – your funds can rise or fall in value. Investments include, for example, stocks and shares, bonds and collective investments and property. Follow the link below to find out more.

It's best to shop around and get professional advice before deciding where to invest your money.

• Main ways to save or invest your money

Getting advice on saving for retirement

You can shop around and compare products yourself, but it's also a good idea to get professional advice. If you buy based on ' information' only you have less protection than if you buy after taking advice.

• Choosing and using a financial adviser

Financial Services Authority (FSA)

The FSA has useful information about savings, investments and pensions. It also produces booklets on planning for retirement.

• Visit the Financial Services Authority website Opens new window
• Financial Services Authority booklets and factsheets Opens new window

The Pensions Advisory Service (TPAS)

TPAS offers free advice on personal and company pensions.

• Contact details for TPAS

The Pension Service

The Pension Service provides information on the State Pension.

• The Pension Service website Opens new window