In broad terms a company pension can be defined as a pension which is established via a company to accommodate the pension needs of its employees. well-qualified are two types of company pension. there is a contributory company pension, in which the pension contribution is automatically taken out of the employee’s salary, before tax and to which the employer charge select to match this benefit obscure their own. There is also the non-contributory company pension, in which the company contributes the price towards the pension on the employee’s behalf.Final Salary ExplainedThe final revenue company pension chart offers the employees a share of their revenue at the time of retirement. This figure is at all times calculated as one shot sixtieth of the employee’s salary multiplied through the number of years they have been occupied within the organisation. This company pension has frequently appeared guidance the press recently as many worthier UK firms have closed this company pension to new employees again in some cases swallow snowy the pension of existing employees. This has occurred in that the risk of this type of pension lies with the employer and now not the employee. Money Purchase ExplainedWith the cash purchase company pension, the actual pay-out sum on withdrawal is directly attributable to the amount of money the employee has paid in, how well the investments perform and the annuity rate. deviating the last revenue company pension, the pledge lies hold back the employee.Final Salary v. Money Purchase.Although the headlines maintenance drawing our consideration to the fact that many companies are moving today from the final salary company pension against the money purchase, it could be dangerous to automatically presume that you are better off with a final salary scheme rather than a money purchase. In fact, even though it is generally accepted that the move away from final earnings schemes is not in the tops interest of the employee’s future, there are individuals who may be greater off under a differential scheme anyway. It will depend on an individual’s circumstances. For example, a person who changes their employer every year may be much better slaughter with a important purchase scheme as it could provide them dissemble greater flexibility. It is always best to discuss your inborn situation with an experienced and unprejudiced economic adviser in order to decide which company pension is the most suited to your circumstances.