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An occupational pension is a pension scheme set up for you by your employer.

So you might have come across someone saying that their employer pays into their pension for them? This is an occupational pension. It really is that straight forward, you could actually call it a workers pension but that would make it too easy for the average Joe to understand.

If they made it too simple, we might know enough to call out those offering bad terms or service.

Who pays into an occupational pension?

Both you and your employer can put money into your occupational pension.

Contributary Occupational Pension

If both of you are putting money into your pension then this is known as a contributary occupational pension. It is a big phrase but it simply means that you are making a contribution i.e. putting some of your own money into your pension pot too.

Non-Contributary Occupational Pension

It can also just be your employer who pays into your pension. If this is the case its called a non-contributary occupational pension. AND this is because…(yes you guessed it) you are not making any contribution yourself i.e. you are not adding any money.

Types of Occupational Pension

There are two types of occupational pensions.

Defined Benefit

The first type is a Defined Benefit Scheme or DB scheme for short. This means you know the amount you will get (benefit) from the start. You will know the amount that you will receive when you retire.

Your employer will tell you how much you can expect to receive at retirement. However as interest rates will change over time your employer won’t be able to tell you what needs to go into the pot.

A DB scheme is managed by a trustee who will change the contributions each year in line with expected growth. This is to ensure they have enough money in the pot to pay you when you retire.

Defined Contribution

The second type of occupational pension is a Defined Contribution Scheme or DC scheme for short. These are the most popular among employers now days because they are less risky. You will know the amount that you put into the pension pot from the start. This could be 5% of earnings from employer and 5% of earnings from employee.

Each employee then has their own pension pot and on retirement receives the value of that pot. The employee will not be able to tell how much it will be worth at retirement because they won’t know exactly what growth it will achieve.

Want to see how your occupational scheme is performing?

If you want to see how your pension is performing the we suggest getting a free pension review. Maybe your considering making additional contributions but if your occupational pension scheme is not performing well you might be better off starting a second personal pension.

One that you are in control of. You can pick where you want to put your money. For example your occupational pension could have a 1% or 2% growth rate where you may be able to achieve a higher growth rate yourself with another provider.

If you want to find our more just request a call back here and a member of our team will contact you to discuss your goals. We will then connect you to the financial advisor best suited to your needs. There is no charge for this service. All of our advisors are regulated by the Central Bank of Ireland.

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