Saturday , July 11 2020

Pensions: How much should you contribute to your pension each month? | Personal Finance | Finance

What types of pension plans are there?

There are many different types of pensions but they tend to be distinguished in two major ways: final salary pensions or defined contribution schemes.

A final salary pension, also known as a defined benefit scheme, are pensions largely funded by employers, though staff may also have to pay into them.

With these pensions, you receive a percentage of your final pre-retirement salary, or when leaving that firm, as an annual income.

A defined contribution scheme, also known as a money purchase pension, is when the money you put into your pension plan is invested and what you have at retirement depends on how those investments perform.

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