Understanding the Different Types of Pensions Available to You

Planning for retirement has never been more important—or more complex. Today’s workers are likely to have multiple employers throughout their careers, so keeping track of various pension pots can become daunting. According to research from LV, the average person in the UK will have nine jobs in their lifetime and work for six different employers. Cengage Learning suggests millennials could have up to 15 jobs during their careers. Meanwhile, Gov.UK has projected that 2050, there could be as many as 50 million dormant and lost pension pots.

With so many changes and transitions throughout your working life, understanding your pensions and where they’re held is essential to achieving a financially secure future.

At Ifamax Wealth Management, we’ve been helping individuals take control of their pensions for over 20 years. Whether you’re just starting or nearing retirement, this guide provides clear and practical pension advice to help you make informed decisions.

Why Pension Planning Matters

Your pension will likely be one of your most valuable financial assets in retirement. Making the right choices today can help you enjoy greater freedom, stability, and peace of mind in later life.

Effective pension planning can help you:

  • Build a robust pension pot that reflects your lifestyle and retirement goals.

  • Make the most of tax-efficient pension contributions.

  • Ensure long-term financial security for you and your family.

  • Gain confidence that your retirement income is on track.

Workplace Pensions

Most employees in the UK are automatically enrolled into a workplace pension scheme, where you and your employer contribute regularly. This type of pension is often a strong starting point for your retirement savings.

Benefits of Workplace Pensions

  • Employer contributions help grow your pension pot faster.

  • Tax relief on your personal contributions.

  • Often include additional benefits, such as death-in-service cover.

Types of Workplace Pensions

1. Defined Contribution (DC) Pensions
These are the most common types. Contributions are invested, and the final value depends on the performance of those investments.

2. Defined Benefit (DB) Pensions
Also known as final salary or career average pensions. These provide a guaranteed income in retirement based on your salary and years of service. DB pensions are increasingly rare in the private sector but remain prevalent in public sector employment.

Personal Pensions

A personal pension offers flexibility and control if you're self-employed or want to save more for retirement beyond your workplace pension.

Common Personal Pension Options

1. Stakeholder Pensions

  • Designed to be simple and low-cost.

  • Capped charges and flexible contributions.

  • Suitable for those seeking an accessible, regulated pension option.

2. Self-Invested Personal Pensions (SIPPs)

  • Offer greater investment choice and control.

  • Ideal for individuals who want to manage their investments actively.

  • Often used by those working with a financial planner to tailor their portfolio.

With a personal pension, you can build up retirement savings independently while still benefiting from government tax relief on your contributions.

State Pension

The UK State Pension is a government-provided income that becomes available once you reach the State Pension age—currently 66, with plans to increase it in the future.

Key Facts About the State Pension

  • Based on your National Insurance contributions

  • The full new State Pension is £230.25 per week (2025–26 tax year)

  • Requires at least 10 qualifying years to receive anything, and 35 years to receive the full amount

Although the State Pension alone is unlikely to support a comfortable retirement, it is a valuable foundation in your broader retirement income plan.

Seeking Professional Financial Advice

Choosing the right pension strategy involves more than simply selecting a scheme. It requires a deep understanding of your current financial circumstances, future goals, and your attitude to risk.

Working with a financial planner can help you:

  • Determine the optimal mix of pension types for your needs.

  • Navigate the tax implications of contributions and withdrawals.

  • Build a comprehensive retirement strategy that evolves with you.

At Ifamax Wealth Management, we take pride in offering tailored pension advice to individuals at every stage of life. Whether you’re just starting to build your retirement savings or preparing to draw an income, we’ll work with you to create a clear, personalised plan that puts your goals back at the centre.

Ready to take control of your pensions?
Speak with our experienced team at Ifamax Wealth Management today and start planning for a more secure financial future.

Risk warning

This article is distributed for educational purposes only and should not be considered investment advice or an offer of any security for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy, or investment product. Reference to specific products is made only to help make educational points and does not constitute any form or recommendation or advice. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.

 

Ashton Chritchlow