When you stop working you need an income to pay for your retirement – enter the pension.

There are several types; a final salary scheme pays you a proportion of your final salary in retirement whereas a money purchase scheme means you save a lump sum during your working life which can be converted into an income (via an annuity or income drawdown) on retirement. It may also be left invested. There is also a state pension of a fixed amount per week, although this is relatively low.

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