I've just started a pension at work and I don't really understand how it works. Its only a stop gap until I can enrol in the Final Salary scheme at the end of this year. I can't find any basic information that explains how it works.

Its a Prudential with profits pension scheme?

Anyone explain this to me.

Thanks

Matt

 

Could be a number of things.

Most likely it's a money purchase arrangement and with profits means it's going into their With Profits fund which (these days) will be a unit linked fund which grows according to the bonus rate (think interest rate).

Money purchase is known as defined contribution (as opposed to final salary which is known as defined benefit) which means that you know what you'll be paying into the money purchase scheme but you don't know what retirement benefits that pot will purchase you when you retire.