Occupational schemes and personal pension plans. Eligibility varies, but unless employer has an occupational pension scheme, the law requires the employer to offer access to a stakeholder plan but does not require employer contribution.
Normal Retirement Age
65 males/65 females
Benefit Formula
Accumulation of contributions with investment returns.
Death and Disability
Included in retirement plan: Death – Normally provided in conjunction; may be from a legally separate plan. Disability – Normally a separate plan, if provided at all.
Vesting
Increasingly immediate vesting – Required under stakeholder/ personal plans. From April 2006, three-month maximum.
Employee Contribution
Typically 2%–7% of base salary. Most plans require a contribution. No legal requirement for a contribution, and noncontributory plans do exist.
Employer Contribution
Equals 4% to 12% base salary; formula often related to level of employee contributions. Some employers use age-related scale.
Financing
Trust fund or a personal pension/stakeholder contract. Contract-based approaches are becoming more common.
Form of Payment
Normally 25% lump sum, remaining benefit as annuity. Flexible forms of annuities are developing.
Hybrid Alternatives
Small number of schemes with various forms of guarantees; not common.
Other
Employee investment choice: Yes. Lifestyle option now common (equity-based investment with automatic migration to bonds and cash over last five to 10 years).
