Documents to download

This paper covers frequently asked questions about occupational and personal pensions:

  • What are the different types of occupational and personal pensions?
  • How are pensions regulated?
  • Where can people find pensions advice and guidance?
  • How can people complain about pensions?
  • Who provides compensation when things go wrong?
  • How are pensions taxed in the UK?
  • How old do people need to be to receive a pension?

Information about state pensions is available in the Commons Library briefing State Pensions: FAQs.

What are the different types of occupational and personal pensions?

There are two main types of pension schemes in the UK. These are:

  • Defined benefit schemes pay a promised pension which is based on factors such as salary and length of service. A sponsor, which is usually an employer, guarantees the promised benefits are paid. The pension provides an income for life and may also include a retirement lump sum.
  • Defined contribution schemes do not provide a guaranteed pension and instead provide a pot of money which can be used in retirement. The value of the pension pot can increase or decrease depending on factors, including investment returns and contributions made.

A third type of scheme, collective defined contribution, was introduced by the Pension Schemes Act 2021.

How are pensions regulated?

Regulation can vary depending on the type of pension scheme or the type of service provided to a scheme or saver.

Pension schemes are either regulated by the Pensions Regulator which regulates occupational pensions, including employer compliance with auto-enrolment duties, or the Financial Conduct Authority which regulates financial services firms and financial markets in the UK. Trust-based pension schemes are regulated by the Pensions Regulator and contract-based schemes by the Financial Conduct Authority.

Where can people find advice and guidance?

People can receive advice or guidance about their pensions:

  • Advice is a personalised recommendation and can only be provided by Financial Conduct Authority regulated firms on the Financial Services Register.
  • Guidance is a broader term including general information and signposting about pensions. Guidance does not include a recommendation but can be offered by any organisation.

Pensions guidance can be provided by any organisation and may be offered by employers, pension schemes and other pension providers.

Free pensions guidance is also provided by MoneyHelper. MoneyHelper is a service provided by the Money and Pensions Service, an arm’s length body sponsored by the Department for Work and Pensions. People aged 50 and over with a defined contribution pot are also entitled to a guidance session with MoneyHelper’s Pension Wise service.

Advice can only be provided by Financial Conduct Authority regulated firms on the Financial Services Register. MoneyHelper has published a guide on choosing a financial adviser.

How can people complain about pensions?

Complaints about pensions can be received by many bodies including the courts.

MoneyHelper produces a guide dealing with pension problems and making a complaint which provides information on the organisations people can complain to.

How are pensions taxed in the UK?

In the UK, private pension saving is taxed on an “exempt, exempt, taxed” model (EET). This means:

A lifetime allowance is the amount which someone can usually build up in pension pots without paying tax. The Finance Act 2021 froze the lifetime allowance at its current level of £1,073,000 until April 2026.

In any given tax year, a person can save the lower of 100% of their annual earnings or the annual allowance into a pension without paying tax. Someone earning less that £3,600 a year can receive relief on contributions up to this amount.


Documents to download

Related posts