Pension Tax Reliefs
Types of pension schemes
There are two broad types of pension schemes from which an individual may eventually be in receipt of a pension:
- Workplace pension schemes
- Personal Pension schemes.A Workplace pension scheme may either be a defined benefit scheme or a money purchase scheme.A defined benefit scheme pays a retirement income related to the amount of your earnings, while a money purchase scheme instead reflects the amount invested and the underlying investment fund performance.The number of defined benefit pension schemes has declined in recent years in part due to the regulations imposed upon the schemes and the cost of such schemes to the employer.All employers will soon need to provide a workplace pension scheme due to auto-enrolment legislation and these are likely to be money purchase schemes.A Personal Pension scheme is a privately funded pension plan but can also be funded by an employer. These are also money purchase schemes. Self-employed individuals can have a Personal Pension
We set out below the tax reliefs available to members of a money purchase Workplace scheme or a Personal Pension scheme.
It is important that professional advice is sought on pension issues relevant to your personal circumstances.