Workplace Pension Scheme

Many employers will provide staff with access to pension plans within the workplace. The plans they offer work in different ways as there are various different types of arrangement.

There are defined benefit schemes and defined contribution schemes.

Defined Benefit Schemes

The benefits provided under these schemes are determined by a member’s service and earnings. Examples of these schemes are:

Final Salary Schemes
Sponsored by the employer and run by a board of trustees. Members contribute to the scheme and the amount of pension payable is dependent the length of time served in the scheme and earnings prior to retirement.

Career Average Revalued Earnings (CARE) Scheme
This has similar characteristics to the final salary scheme with the exception that it matches each year’s benefit accrual to earnings in each year as opposed to the final year’s earnings.

Defined Contribution Schemes

These schemes provide retirement benefits based on the investment of contributions paid by both the employer and employee to build up a pot of money.

Group Stakeholder Pension Schemes
Similar characteristics to GPPs but designed to incorporate minimum standards laid down by the government. These standards include a cap on the charges associated with running the scheme and no penalties on stopping, altering or transferring the benefits to another scheme.

Small Self Administered Schemes (SSAS)
These are schemes usually set up for senior staff or directors and allow greater control over the scheme’s assets. The trustees of a SSAS can invest in funds of the pension in various investments including land as well as stocks and shares.