Main categories of pension:

  • State pension, 
  • Private pension
  • Workplace pension.

An individual can have a state pension, a private pension, a workplace pension, or any combination of them. 


Workplace pensions can also be divided into two types: -

  • A defined benefit plan - a DB plan specifies exactly how much retirement income employees will get once they retire;
  • A defined contribution plan - a DC plan only specifies what each party – the employer and employee – contributes to an employee's retirement account. 

The basic difference is what each plan promises its participants


How do private pensions work?

Private pensions work similarly to a defined contribution workplace pension. This means that you’ll get out what you put in, plus tax relief and any investment gains. One of the key differences between workplace pensions and personal pensions is tax relief. With a workplace pension, your contribution is taken before tax which can reduce the overall tax you pay on your salary. However, with a personal pension, your contributions typically happen after tax. See more at the bottom of this page.

See more [here].