Occupational Pensions - What You Need To Know About Occupational Pension Schemes

For those of you that are employed by a company, you may be able to join their occupational pension scheme. Occupational pension schemes can be a good way to save for retirement because your employer has to contribute into your occupational pension by law, plus your employer may pay the administration charges separately unlike other pensions where you pay for the administration costs.

Also some occupational pensions guarantee that your pension will be a certain amount of your salary making it much easier for you to know what income you will have in your retirement. You may also get other benefits such as the ability to retire early on a lower pension, a pension for your widow/widower if you die before retirement or a pension for your widow/widower if you die after retirement or a pension if you have to retire early because of illness.

There are several tax advantages with occupational pensions such as you get tax relief on the amount that you put in, the amount contributed by your employer is a tax free benefit, when you retire you can take a tax free lump sum with the remainder of the pension paid to you being taxable and capital gains on the contributions made build up tax free. However whilst a part of the income builds up tax free, the income from unit trusts, shares and some other types of investments are taxable.