Before 1985, it was normal for employees to get a pension set up by their employer for when they retire. This was in the hands of the employer and they chose everything that happened with it; where it was kept if they moved it and they did not have to communicate with the employee about their pension. So when it comes to claiming their pension they are unaware of what they will receive.
Times have changed and now pensions are much more costly for companies and employers to set up and save for you. This is why it is important to have this knowledge of pensions and what to do if something happens to your loved ones.
You have the right to know all relevant information, whether you have a workplace pension or a private pension. When you do decide it is time to claim your pension you should be informed of your options and current balance. Pension rights can be a difficult topic that can seem complicated to many, however, when broken down it isn’t so hard to understand.
To help understand the different meanings that will be used in the text we have defined some key terms below:
A defined contribution pension
Means a money purchase scheme that provides benefits when you retire based on the amount of money that has been paid into the scheme, how long the money has been invested and the level of charges over this period. (private pension)
A defined benefit scheme (workplace pension)
This is a workplace pension scheme set up by the employer.
A new state pension
Is a regular payment from the government that most people can claim in later life.
A basic state pension
A regular payment from the government based on your previous National Insurance (NI) payments.
4.60