🟩 How Defined Contribution Pensions Work

• You and your employer pay money into your pension pot.

• The money is invested in funds such as shares, bonds, or property.

• Over time, your pot grows depending on how much you contribute, investment performance, and tax relief received.

🟩 What Determines Your Retirement Income?

The final size of your pension pot depends on:

• Total contributions made.

• How your investments perform.

• How long your money stays invested.

• Any charges deducted by your provider.

Your future income is not guaranteed — it depends on how you choose to take money from your pension when you retire.

🟩 Flexibility at Retirement

At retirement, you can:

• Take a tax-free lump sum (usually 25%).

• Use flexi-access drawdown to take flexible income.

• Buy an annuity for guaranteed income.

• Blend multiple options to suit your needs.

🟩 Defined Contribution vs Defined Benefit

• Defined Contribution: You build your own pension pot; income depends on contributions and investment returns.

• Defined Benefit: You receive a guaranteed income based on your salary and years of service (now less common outside the public sector).

🟩 Why Regular Reviews Matter

Because your investments affect your pension’s growth, regular reviews ensure your fund remains appropriately invested as your retirement approaches.