If there is any type of investment that will help you in your future, private pension is your solution. This is why it is important you start saving for your later life after retirement early on.

A private pension scheme allows you or your employer to save money for your future. With a private pension scheme, you or your employer can make contributions from your earnings which you will get after your retirement.
On the other hand, your dependants will also get protection from this saved money in case of your death.

Normally, there are two types of private pension for saving money for your future. First one is defined contribution pension scheme and other one is defined benefit pension scheme. These two schemes work differently.

A defined contribution scheme is usually called personal or stakeholders pensions. It can be either a workplace pension scheme arranged by your employer or a private pension arranged by you. When you decide to take your savings from your pension pot, the money you will get depends on how much you have paid in and how well investments have done over the years.

A defined benefit pension scheme is called final salary or career average pension schemes. These schemes are always handled by your employer. Unlike defined contribution scheme, the amount you get doesn’t depend on the investments but will depend on other things. These things include your salary and the number of years you have worked for your employer.

One more important thing, you will usually get 25% of your pension tax free in both schemes.

Whether you choose defined contribution or benefit pension scheme, these schemes are aimed at helping to secure your future. So, make sure you start saving in your pension as soon as you work to have a good life after you retire.