Money purchase schemes invest your money to build up a pension fund for you. When you retire, you can normally take up to 25% of your fund as a tax-free lump sum, and use the rest to provide an income. These are often called ‘defined contribution’ schemes. Usually, your employer also pays into the scheme and there are trustees to look after your interests and keep an eye on the fluctuation of your fund.

If you can join your employer’s scheme it’s usually a good idea to do so, particularly if the employer pays towards your pension fund - some schemes are very generous. You can still take out a personal pension if you need to top up your savings for retirement.