In simple terms, a pension scheme is just a type of savings plan to help you save money for later life. It also has favourable tax treatment compared to other forms of savings.
A long term savings plan
It makes sense to put some money away for when you’re older and that’s what pension schemes help you do. You save a little of your income regularly during your working life so you can have an income in later life, when you want to work less or retire.
There are several types of pension schemes. Some may be run by your employer, others you can set up by yourself. And saving into one scheme doesn’t mean you can’t save into another or use other tax-efficient savings plans like ISAs.
When the time comes for you to start enjoying your pension, there will be several options available to you. These may include being able to take a tax-free cash sum and the added security of being able to receive a regular income.