What is a pension scheme meaning?

A pension scheme is a type of long-term savings plan. And it’s a tax-efficient way to save during your working life. You save some of your income regularly during your working life. This gives you an income in later life, when you want to work less or retire.

What is a company’s pension plan?

DEFINITION. A pension plan is a type of employer-sponsored retirement plan that pays employees a set income during retirement, usually based on how long they worked for the company. These plans are becoming less common as more employers offer 401(k) retirement plans.

What type of scheme is a workplace pension?

A workplace pension scheme is a way of saving for your retirement through contributions deducted direct from your wages. Your employer may also make contributions to your pension through the scheme. If you are eligible for automatic enrolment, your employer has to make contributions into the scheme.

What are the objectives of pension scheme?

One of the main objectives of the pension reform is to ensure that every person that worked in either the public or private sector in Nigeria receives his/her retirement benefits as and when due.

What is a defined benefit occupational pension scheme?

A defined benefit pension (also called a ‘final salary’ pension) is a type of workplace pension that pays you a retirement income based on your salary and the number of years you’ve worked for the employer, rather than the amount of money you’ve contributed to the pension.

Why are pension plans important?

Maintain Productivity: A pension plan is a promise of better financial health for employees during retirement. Foster Retention and Attraction of Employees: A pension plan is a significant part of the employees’ total compensation. It results in greater employee commitment and satisfaction.

What are the benefits of pension plans?

Features & Benefits of Pension Plans

  • Guaranteed Pension/Income. You can get a fixed and steady income after retiring (deferred plan) or immediately after investing (immediate plan), based on how you invest.
  • Tax-Efficiency.
  • Liquidity.
  • Vesting Age.
  • Accumulation Duration.
  • Payment Period.
  • Surrender value.

What type of pension schemes are there?

The three types of pension

  • Defined contribution pension. Sometimes called a ‘money purchase’ pension or referred to as a pension pot, these schemes are very common today.
  • Defined benefit pension. This type of pension scheme has declined in popularity.
  • State pension.

What is employer pension contribution?

Employer contributions are payments your employer makes into your pension – and they can be highly tax efficient. When your employer contributes directly to your SIPP, not only can you save tax, but your employer can too. Contributions can be made regularly, or as one-off payments.

What do pension companies do?

A typical company pension arrangement involves employees putting a certain proportion of their monthly earnings into their pension, and the employer adding its own contributions as well. This money is then invested in some form of stock-market-linked fund, often run by a major pension provider.

Why is it important to have a pension?

pension schemes can provide protection in the form of lump sums and pensions to dependants in the event of a member’s death; in order to encourage pension schemes, the State provides tax relief on contributions made to pension schemes and the growth in their investments.