Occupational pensions are those pensions provisions that are arranged by employers, rather than the state, to which employers, and usually also employees, contribute.
The two main types of occupational pension are:
Defined benefits schemes (such as final salary schemes) where certain levels of payments are effectively guaranteed upon retirement
Defined contribution (or money purchase) schemes where the eventual levels of payment may vary according to such factors as stock market performance during the intervening years.
There are also certain ‘hybrid’ arrangements, for example ‘cash balance’ schemes, where employers may continue to offer some limited guarantees over levels of pensions payments.