The different types of pension can be confusing to someone new to the subject. However, in reality there are just four main types of pension. On subsequent pages we go into each type of pension in more detail but is here is a brief overview.

State Pension

What? 

The state pension is the UK government’s pension scheme. It is dependant on National Insurance contributions.
 
Provided they have satisfied their National Insurance contribution requirements, women get paid the basic state pension at the age of 60 while men start getting paid at 65. By 2020, the pension age for both men and women will be 65 with increases in the age expected to be phased in over the next few decades. 

Personal Pensions 
 
What?
 
This is simply where one has an accord with a pensions provider to keep away money for their retirement. Any individual that is not set to get a pension from an occupational pensions scheme qualifies for a Personal Pension.    
 
To save money for your retirement, you give your money to a pension provide who invests on your behalf. Over a sustained period of time, the value of your money should increase considerably.
 
Once you retire, you use your Pension Fund to get yourself an assured income – typically for the rest of your life. While many people often refer to this as their “pension”, it is actually an annuity. Upon retirement, you are eligible to take out a tax-free lump sum worth up to 25% of your Pension Fund.
 
How many can I have?
 
There is no limit to how many personal pensions you can have. However, the sum of all your contributions cannot exceed your tax break limit. Up to the age of 35, individuals can put in up to 17.5% of their incomes.

Occupational Pensions

What?
 
Occupational pensions work similarly to personal pensions except they are managed by the individual’s employer. As a result, they exclude individuals who are self employed or this who work for companies that don’t provide them.
  
How many can I have?
 
You can only have one occupational pension at a time. You can however continue to have more than one so long as you are not making payments into them. For example, if you change jobs your previous occupational pension can continue growing for you but you cannot make additional payments into it.

Stakeholders Pensions 

What?
 
Stakeholders Pensions are relatively new having been introduced in 2001. They work very similarly to Personal Pensions except for the fact that they do not have initial up front costs. Controversially, individuals on Personal Pensions were often surprised to note that for example, the first 2 years worth of their contributions went towards up front charges. You can take them out for other people, including your children.
 
Stakeholder Pensions were meant to target individuals on moderate incomes of up to about £20,000 per annum. However, while they probably offer a better deal than traditional Personal Pensions, they have only been moderately successful.     
 
How many can I have?
 
Like Personal Pensions, you can have as many stakeholder pensions as you like so long as you are within your maximum annual contribution of $3,600 of your gross income. Bearing in mind that the minimum contribution is £20 per month, you can take out more than 10 Stakeholder Pensions and still fall within the £3,600 limit.