These are employer run schemes that have trustees who are responsible for the schemes being run properly, legally and fairly. If your employer has a scheme it is almost always in your interests to join because of the employer contribution which is in effect a tax free benefit.
N.B. There may be a valid reason for not joining an Occupational Pension Scheme. If you do not want to join you are best seeking independent advice before deciding.
A If your Occupational Pension Scheme is a Money Purchase/Defined Contribution scheme your employer will tell you what percentage of your earnings the company is paying.
Q Can I make extra contributions to the scheme?
A Yes. If you have a final salary pension it may be possible to do what is known as buying added years. Extra contributions can also be made to your employers Additional Voluntary Contribution Scheme (AVC).
Q If I am a member of an Occupational Pension Scheme can I also take out a Personal Pension?
A Yes, provided the maximum allowance is not exceeded.
Q How much tax free cash can I take from my Occupational Pension Scheme?
A It depends on length of service with your employer, when you joined the scheme, your final earnings and the scheme rules. Commonly the tax-free cash sum is 3/80ths for each year of membership multiplied by your final pensionable earnings.
Membership of an OPS after 6th April 2006 will have a tax free cash sum of 25% of the pension fund.
A By asking the trustees/your employer. Information on fund performance should also be available to you.
Q How do previous employer pensions affect my existing one?
A Only to the extent that they are taken into account when assessing your total final retirement benefits which cannot exceed the Lifetime Allowance(LTA) of £1.5million(2012/13)
Q Is it worth me opting out of my employers Occupational Pension Scheme and taking out a Personal Pension?
A Almost never! After all, your employer makes a contribution to the Occupational Pension Scheme which would not be available if you did not join and instead took out your own Personal Pension.
Q What types of Occupational Pension Scheme are there?
A There are two basic types of scheme:
Also because of the increasing costs of running Final Salary schemes many employers are changing, or restricting new employees, to Money Purchase.
Q What are Small Self Administered Schemes (SSASs)?
A These are small (less than 12 members) company pensions for director/shareholder run private limited companies. The main advantage of a SSAS is that the members have control over where the funds are invested eg. stocks and shares, commercial property etc.
This web site contains links to, and from, third parties. We do not accept any responsibility for information contained in other sites. Information provided by other sites is believed by PensionCheck to be reliable and accurate. However, PensionCheck does not guarantee this and accepts no liability. You agree and understand that while it may be possible to access information through this web site this does not constitute a recommendation to buy, sell, or otherwise trade all or any of the investments which may be referred to.