None of us like to think about getting older, but when we do, we think about taking it easier, not having to work as hard and having a great time. So the question is, how are you going to be able to pay for this relaxing lifestyle? Well, paying into a pension is a great place to start.

So, what is a Pension?

Basically, pensions fall into three main categories: State, Occupational and Individual. It’s important to know what pensions you have and an idea of what they are likely to pay you once you retire. Like any form of savings, they need to be regularly reviewed.

If you’re unsure as to which category your pension may fall into or which would best suit your needs, here’s a little more information:


Provided you have enough “qualifying years” (currently set at 35 years) the new flat rate State Pension will come into effect for those retiring after 6th April 2016.

The full new State Pension will be “no less than £151.25 per week”. The actual amount will be set in autumn 2015.


Occupational Pension

This is a pension scheme set up by an employer for the benefit of the employees.

In a “contributory scheme” both the employer and employee contribute to a fund which grows free of tax during the savings period. In a “non-contributory scheme”, only the employer contributes.

The amount paid out to the employee on retirement will depend on the type of scheme and reflect either the contributions paid in or the number of years service and the final salary of the employee.


A personal pension is an individual investment policy, that has the benefit of added tax relief on personal contributions.

The main purpose of this type of plan is to build up a “pot” of savings, to draw from when you retire. Benefits can be taken at any time after age 55 if the plan rules allow or sometimes earlier, if ill health is a factor.

It is usual for these types of plans to allow 25% of the “pot” to be taken as a tax-free cash sum, although this is based on current legislation, and may change in the future.

Need more advice?

Contact Us

*Danbro Financial Services is a Trading Style of Palm Financial Care Limited which is Authorised and Regulated by the Financial Conduct Authority. Palm Financial Care is Registered in England.
Registered Office: The Chambers, Britannic House, 47 Albert Road, Colne, Lancashire BB8 0BP. Registered Number 6261386.