Company pension

A company pension is a pension that an employee joins whilst working for a specific company.

Normally an employee will be invited to join the scheme after six months or one years’ service. Typically, the company will pay a certain percentage of the employees’ salary into the pension fund, often around five per cent.

The employee can choose to match this contribution or pay more or less in. The employee benefits from a tax break that effectively means for every £80 paid in, £100 is received into the pension fund.

Most medium and large companies and many small businesses have their own company pension scheme and the government plans to introduce a new system called National Employment Savings Trust (NEST) which will make it compulsory for all private companies with more than a few employees to operate a company pension scheme.

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