Fehnert provide comprehensive advice on planning your retirement. To speak to our pensions team please telephone: 01858 434422.

What is an occupational pension scheme?

An occupational pension scheme is an arrangement an employer makes to give its employees a pension when they retire. Occupational pensions are also known as company or work pensions. By not joining you could be missing out on tax relief as well as contributions towards your pension made by your employer. You can get an occupational pension on top of any State Pension you may be entitled to.

There are three important benefits of an occupational pension:

1. Tax relief: you get tax relief on your contributions. This broadly means that with a basic rate of income tax of 22%, for every £100 you pay in, the amount you pay in tax will be reduced by £22 (based on the tax year 2007/2008). With a higher rate of income tax of 40%, for every £100 that goes into your pension, the amount you pay in tax will be reduced by £40 after the claim for higher rate tax relief has been made. (based on the tax year 2007/2008).

(You can contact your pension provider for more detailed information about how tax relief works in occupational pension schemes. Or you can telephone HM Revenue & Customs)

2. Employer contributions: most employers who run occupational pension schemes make contributions to the scheme on top of those paid by the member.

3. Extra benefits: occupational pension schemes may offer other benefits such as life assurance or a pension for your dependants if you die. You will need to check the exact benefits with your pension scheme provider.

There are two main types of occupational pensions, both of which have either trustees or scheme managers to look after members’ interests.

Salary-related pension schemes (also called defined benefit, DB or superannuation schemes)
In a salary-related scheme, the pension you get is based mainly on the number of years you belong to the scheme and your earnings. Your pension can be based on your earnings when you retire or leave the scheme or your average earnings during the time you contributed to the scheme. In some schemes only your basic salary counts towards your pension, but others also include additional payments such as overtime and bonuses.You usually have to pay contributions into the scheme on top of those that your employer pays.

Money purchase pension schemes (also called defined contribution or DC schemes)
In a money purchase scheme, your contributions (together with any from your employer) are invested and the amount you get when you retire depends mainly on the total amount of money you and your employer have paid into the scheme over the years and how the investment has grown. When you retire, you can choose to take some of your pension savings as a tax-free lump sum. The scheme will then use the rest of the fund to either pay you a pension or buy you an Annuity from an insurance company to give you a regular income when you retire. This is why they are called ‘money purchase’ schemes – you are swapping your fund for a regular income for the rest of your life.

Lost touch with an old pension?

If you have a pension that you have lost touch with or are unsure of its value we able able to assist with this, alternatively, please follow the link below for The Pension Tracing Service. This will enable you to ask for a pension trace for yourself or someone you know.  You can even track down someone elses old pension if you think you may be a beneficiary.  All you need is the name of the pension scheme, or the employer the scheme is with.

www.thepensionservice.gov.uk/tracing  or ring 0845 6002537 for The Pension Service.

or You may apply for a State Pension forecast from the Department of Work and Pensions online here

If you would like to talk to us more about this or would like us to assist you with tracing your pension, or any other matter regarding any aspect of planning for your retirement, please contact our pensions team here.