At the highest level, pension benefits build up in two ways: defined contribution (DC) pensions and defined benefit (DB) pensions.
|DB pensions build up based on: a part of your salary, andthe number of years you build up the pension. Over the years your employer builds up a pot of money they use to pay the pension you’ve been promised. See What is a defined benefit pension scheme?||DC pensions build up based on: contributions – from you and your employer, if you’re in a workplace scheme, andreturns on the investments you choose. Over the years you build up a pot of money to use for retirement income. See What is a defined contribution pension scheme?|
|Some pension schemes provide both types of benefits. These are known as ‘hybrid’ schemes.|
Then there are workplace pensions, personal pensions and the State Pension.