Private pension income
Personal Tax
Guidance
A private pension is a generic term which covers any pension scheme other than the state pension. The most common types of private pension are:
- 鈥�
occupational pension schemes to which the employee and / or employer contribute
- 鈥�
personal pension schemes, which are either set up by the individual independently or arranged by an employer as a group personal pension scheme
Private pension arrangements fall into two categories: defined contribution and defined benefit, as explained below.
For information on the state pension, see the State pension guidance note. For details of pensions paid by foreign payers, see the Foreign pension income guidance note.
Defined contribution schemes
Defined contribution pension schemes (also known as money purchase schemes) are schemes where the pension benefits paid out are dependent on the contributions paid and the growth in the value of the pension fund over the period between paying the contributions and taking the pension. All non-occupational schemes are defined contribution schemes and most new joiners to occupational schemes (outside the public sector) will find themselves in such schemes.
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