When dealing with different pension providers, it is possible that the scheme they offer will vary. Just like with company pension schemes. But even if they are different, they are still categorized into two general types, which are money purchase and final salary scheme.
In money purchase, your pension will be based on the contributions you and your employer have made and the interest that it accumulated. This contribution will create a fund that will be used to purchase annuity on your retirement.
The fund is computed using an annuity rate, which is based on age, gender and the interest rate at that time, making it impossible to predict your possible pension.
Under this, members are protected by a Pension Protection Fund if there is deficit on the fund. Deficit may only occur if there is fraud and/or theft.
While in final salary (or defined-benefit), your pension is based on your salary and the number of years you are under the scheme. So if your salary is fixed and you can assume the number of years you’ll stay under this, you will somehow know in advance your possible pension.
With some providers, you need to wait you reach 65 to take your benefits. Also option of having tax-free lump sum with smaller monthly income is possible under this scheme.