Pension Planning - Salary Related Pensions

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Salary Related Pensions

These schemes assure that you will receive a certain amount of pension calculated by a formula. This formula usually depends on the number of years that you have belonged to the scheme and your salary before retirement. Usually one-eightieth of your pre retirement salary is added to the amount for each year in the scheme. The other benefits available in an occupational salary related scheme, such as a widow's pension and the tax-free lump sum are worked out in a similar way, through a formula.

You may have to cover some of the costs If the scheme is contributory, however it is your employer's responsibility to ensure that a sufficient amount has been paid into the scheme, to provide the benefits.

Restrictions apply to the extra benefits of an occupational pension scheme, which have been set by a government department the Inland Revenue. Nevertheless most schemes provide benefits that are within these restrictions.

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