Pensions

Pensions—general considerations

Payment into pension schemes that are registered with HM Revenue & Customs (HMRC) has significant tax advantages for both employers and employees. Pension schemes are also a way of attracting and retaining employees.

Under European law pension benefits are considered to be deferred pay, so they are subject to the principle of 'equal pay for equal work'. A significant amount of indirect discrimination litigation has occurred in the past few years, the majority of which had been brought by part-time workers, the majority of whom are women.

Employers may run occupational pension schemes for the benefit of their employees. Occupational pension schemes tend to be either 'final salary' (also known as 'defined benefit') schemes or 'money purchase' (also known as 'defined contribution') schemes:

1. •

   final salary schemes commit the scheme, under the deed and rules, to paying members a set annuity on retirement

2. •

   money purchase schemes require employees and employers to pay a set amount each year into the scheme, usually expressed as a percentage of earnings

Personal Pension Plans are not occupational pension schemes; they are funds held in respect of private individuals with financial