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The three types of pensions - and what you need to know about them

Mirror logo Mirror 11/02/2018 James Walker

© PA Are you looking forward to retiring? With Monday just around the corner, you might be fantasising about an extra hour or two in bed with - ideally - nothing to stress about.

But are you prepared for when the great day comes and you’re free from the 9 to 5?

Retirement might seem pretty far away for many people. For others, it’s a constant worry about making ends meet. That’s why we need to have a chat about pensions and retirement planning.

Many of the people I speak to worry because they don’t know much about pensions. So I’m here to say to you, don’t worry!

Pensions are complex, which is why we’re launching a campaign to make things simpler. If you’re struggling, here are the basic facts.

Pensions - what you need to know

There are three main types of pension. The state pension (paid by the Government), ‘occupational’ pensions (your pension through work) and private/personal pensions (what it says on the tin).

Work pensions come in two main types. Final salary (or defined benefit) pensions are dying out, unfortunately. Most of us have ‘money purchase’ (defined contribution) pensions now.

Some people opt to combine their previous work pensions into one or move their money into a private one. If you’re transferring or taking out a private pension, you can’t beat good advice.

Make sure you ask for everything to be explained simply and in writing. Ask how much commission the business/pension company will take. And don’t ever be afraid to say you don’t understand.

If you need more information or want to make a complaint, check out Resolver’s guide at

Our friends at The Pensions Advisory Service (TPAS) have a great website with tons of information – you can ask them any question that you have on your pension, from finding a missing pension scheme to finding out how much you can save each year tax free .

And if you’re approaching retirement age with a money purchase pension and want to know about your retirement options, speak to Pension Wise .

Most importantly, if you're worried that you aren't saving enough for retirement or just need help, speak up. You’re not alone.

I want to know if you’re worried about pensions and retirement – so let me know what you think by emailing us

Slideshow: 13 dream retirement destinations that don't cost a fortune (lovemoney)

Growing old in the sun: Many people have the ambition of cashing in their savings and moving abroad when they stop working to enjoy their retirement in the sun. However, retirement savings and even pension pots are not bottomless wells of money, so it’s important to consider cost of living, property prices and the cost of health and social care when picking a retirement destination.

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