Final salary pensions - sometimes referred to as defined benefit schemes - are largely funded by employers. With this pension, you get a percentage of your final salary before retirement, or when leaving the company, as an annual income.
Money purchase pensions - also known as defined contribution schemes - are when you save your pension under a ‘money purchase arrangement’. The amount you’ve saved can then be withdrawn or swapped for an annuity - an income for life. Most personal pensions are saved for by this method, which includes; workplace, trust-based, group personal, stakeholder, and self-invested personal pensions (SIPPs).
State pension - this is where you get a small pension (currently £155.60 per week) from the government when you reach retirement age. You build up entitlement to the state pension by paying national insurance throughout your working life.