What is a company pension?

A Company or Occupational Pension Scheme is one that is set up by the company to provide a pension for employees.  The company usually sets up the rules of the pension scheme and appoints “trustees” to look after it. You don’t pay tax on your contributions. The company automatically takes your contributions from your salary, before working out income tax on your remaining income.  There are two types of  scheme, either a defined benefit scheme or a defined contribution scheme.

Defined benefit scheme

With a defined benefit scheme, the pension income and/or lump sum you get when you retire is related to your final salary and years of service. For example, you might get a maximum of half your salary or two-thirds of your salary after 40 years’ service, including the state pension.

Defined contribution scheme

With a defined contribution scheme, or money purchase scheme is based on building up a pension pot over the term of employment.  The final pot will be determined by: Attitude to risk and contributions over the term of the employment.

Can my pension be taken away?

Because the pension scheme is set up using trustees the scheme is protected under irrevocable trust, meaning that the company has no access to the funds in the scheme, however in the case of a defined contribution the scheme could be underfunded and the company may not be able to fulfill obligations to provide full pension benefits at retirement.

What happens to company pensions when you leave?

Typically, you'll have three options for your pension when you leave your job. You can do nothing. You can move it into the pension that comes with your new job. Or you can move it away from your own company and into an account in your own name (known in Ireland as a Personal retirement bond, or a Buyout bond)

Can I add more than the stated amount?

Additional Voluntary Contributions (AVCs) are contributions you make to your employer pension scheme to build up an additional retirement fund. When you retire, this AVC fund can be used to top up your employer pension benefits, within Revenue limits. Some AVCs also offer the facility to add additional death in service benefits for dependents.

What is death in service?

The lump sum benefits payable depend on the type of pension arrangement that you may be in and other circumstances such as whether or not you have dependents.

Usually 4 times salary however can me more but only 4 times salary will be paid out as a lump sum, the balance if there are dependents will be used to purchase an annuity.

Are there payments in the death after retirement ?

Depending on the scheme there may be 50% of the original pension paid out if an annuity option was chosen at retirement.


If you own the company and use it to fund your retirement, the rules are going to change in the near future whereby you could well become obligated to provide a company pension and provide some level of contribution on behalf of your staff.  If you are an employee and in a company pension make extra contributions via an AVC.