Education

Employer pension contributions are the share of a workplace pension paid by the employer on behalf of the employee under UK auto-enrolment rules.

BothOptionssit alongside the State Pension and rely on the same 25% tax-free cash entitlement (subject to the Lump Sum Allowance) for defined contribution savers.

Emergency tax codes commonly apply to first withdrawals; HMRC offers P55, P53Z and P50Z forms to reclaim overpaid tax.

DB schemes promise a salary-linked income, while DC pots depend on contributions,Investmentperformance and charges.

DB pays a promised income; DC builds a personal pot whose value at retirement depends on contributions andInvestmentreturns.

The two main forms are final salary schemes (linked to pensionable pay at retirement or leaving) and career average revaluedEarnings(CARE) schemes.

Returns,Volatilityand sequencing risk can each dramatically alter the size of the pot and the income it produces.