Pension A pension is a retirement fund for an employee paid into by the employer, employee or both, with the employer usually covering the largest percentage of contributions. When the employee retires, paid in an annuity calculated by the terms of pension. Pension savers benefit from large tax benefits, which automatically raise their retirement assets, but to truly maximise your income later in life, you must generate the highest possible returns on your contributions. Four years ago, pension freedom reforms added a new dimension to this argument. Nowadays, the majority of savers do not purchase an annuity that pays a guaranteed regular income when they choose to start cashing in their assets, preferring instead to draw money directly from their savings. In that scenario, you'll need to have appropriate investments in place for this stage of your life. Before and After To put it another way, investing through a pension is now a two-step procedure. The first phase involves attem...