Your pension provides a reliable source of income when you retire. The way they work is straightforward.
Workplace pension schemes and private pensions are typically defined contribution pensions.
With this type of pension, you pay money to the pension provider, which is then put into an investment fund with the aim of growing over time. These funds are also known as your pension pot.
Your pension pot's value will change based on the performance of investments and the amount of time you are invested. While there is no fixed retirement age, you can access your pension retirement savings from age 55.
Although rare now, defined benefit pensions work differently from defined contribution pensions.
These can usually be accessed at 65 or your State Pension age and provide a fixed income for life. The amount you get is based on either:
The average amount you earned throughout your career or;
The salary you made when you retired