You may wish to offer a pension scheme as a benefit for your employees. It can help with staff retention and will give your staff the impetus to save for their retirement in addition to their state pension.

Types of pension

Occupational pension schemes – these are private pension schemes run by some employers and are also known as a works pension, company pension or superannuation. You can find more information on occupational pensions here.

Money purchase pension schemes – contributions made by you and your employer are invested in the stock market. However, share prices can fall as well as rise, so if the stock market takes a turn for the worse, your pension may fall in value. Find out more about Money purchase pensions here.

Personal pensions – a personal pension is a private pension that receives certain tax advantages. Staff can take out a personal pension under a contract with a pension provider and contribute to it themselves, and you can contribute as an employer too.

Stakeholder pensions are a type of personal pension. You can find out more information on personal and stakeholder pensions here.

Your obligations

If you don't provide an occupational pension scheme for your staff, you may be required by law to offer them access to a stakeholder pension. According to The Pension Service, there are a few exceptions to this. For example, if you:

- Employ fewer than five people

- Offer all employees aged 18 or over a personal pension scheme through which you contribute an amount equal to at least three per cent of the employees' basic pay.

You can find general information on pensions from The Pensions Service.

See also: Government unveils 'straight talking' pensions guide for small businesses