What are the three main types of pensions?

The Three Main Types of Pensions

Understanding the different types of pensions can help you make confident choices about your future. Whether your plan is through work, the state, or set up privately, each option plays a key role in your long-term financial wellbeing.

1. State Pension

The State Pension is a regular payment from the UK Government once you reach State Pension age. You qualify through your National Insurance contributions over your working life. As of 2025/26, the full amount is £221.20 per week, depending on your contribution record.

It forms the foundation of your retirement income and works alongside your workplace or private pension. Learn more about retirement planning options that build on your State Pension.

2. Workplace Pension

A Workplace Pension is arranged by your employer and includes contributions from you, your employer, and the government. Most UK employers automatically enrol staff into these schemes.

Contributions are usually invested into funds to help your savings grow over time. For more on how these payments work, visit How Pension Contributions Work.

3. Personal Pension

A Personal Pension is one you set up yourself — ideal if you’re self-employed or want extra savings beyond your workplace plan. You choose how much to contribute, and your provider invests it for long-term growth.

These plans can include SIPPs (Self-Invested Personal Pensions) and stakeholder pensions. To explore these in depth, see Types of Pensions Explained.

Building a Clearer Path to Retirement

A good pension strategy combines knowledge of all three types. Explore how your workplace and personal pensions can complement your State Pension to create a comfortable, balanced retirement plan.

Explore Pension Planning

Frequently Asked Questions About Pension Types

Understanding the differences between pension options can help you make the most of your savings. Here are some of the most common questions people ask when exploring the main types of pensions.

Which type of pension is best for me?

The best pension depends on your situation. Most people benefit from a Workplace Pension due to employer contributions, but adding a Personal Pension can increase flexibility and investment choice. The State Pension provides a foundation for everyone based on National Insurance contributions. Learn more in our full Pension & Retirement Planning guide.

Can I have more than one pension?

Yes. You can hold multiple pensions — for example, a Workplace Pension from your employer and a separate Personal Pension that you manage independently. Many people build up several workplace schemes over time when changing jobs, and these can be consolidated later for easier management.

What happens to my workplace pension if I change jobs?

When you change employers, your existing workplace pension remains yours. Your old employer stops contributing, but the money stays invested. Your new employer will start a new pension scheme for you. You can choose to leave your old pension where it is or combine it with your new one. Learn more about how contributions are managed in our article How Pension Contributions Work.

What’s the difference between a defined benefit and defined contribution pension?

A Defined Benefit (DB) pension promises a guaranteed income in retirement, based on your salary and years of service. A Defined Contribution (DC) pension builds a pot of money from your and your employer’s contributions, invested for growth. The amount you receive from a DC plan depends on how much you pay in and investment performance.

Do self-employed people get a pension?

Self-employed individuals don’t get a workplace pension automatically, but they can set up a Personal Pension or SIPP (Self-Invested Personal Pension). These offer flexibility in contributions and investment choices, along with tax relief on payments. For details, see Types of Pensions Explained.