How does your pension work?
Your pension is a valuable benefit. Here is a quick snapshot of how it works.
Your pension is a simple and cost effective way for you to save for your retirement. It is defined contribution and this means it works a bit like a savings account:
- Money goes in – While you are an active member, you and your employer contribute to your retirement account every month. The Government also provides a number of tax incentives to help you save more.
- You help your savings grow – You choose where to invest your retirement account from a range of investment options. How much your savings grow by will depend on how your investments perform, how much money goes in and when you retire.
- You use your account to support you in retirement – When you retire you can use the money you have saved to provide an income – there are a number of different income options you can choose. You can also take some of your money as a cash lump sum (currently up to 25% is tax free and the rest is taxed as income).
To find out more, please read your Scheme website.