Whilst the specific terms and conditions of different pension plans can vary (you can see the specific details for this one here: https://PensionsForNomads.com/terms-conditions/), the basic principle is the same for all pension plans – you put some of your income into your pension plan whilst you are working, the money you put into your pension plan is invested so that it grows in value over time, and then by the time you reach retirement age you have a large pot of money which Future You can use to fund the things you need (and want) in life.
Most pension plans worldwide (with the exception of government/public pensions) give you the choice of what to do with that money when you retire – you could purchase an annuity from an insurance company (you give the insurance company one big chunk of money, and they agree to pay you a fixed monthly amount until you die – this is often not the best choice but works well for some people), or you could use it to fund a major purchase (such as buying a property), or you could simply keep it invested and growing, and make withdrawals from it (either fixed regular withdrawals, or ad-hoc withdrawals as and when you need money). The “best” thing to do with your pension plan when you retire will often be highly dependent on your personal circumstances at the time, and it is very common for different people to make different choices, because everyone has different personal situations and different plans for their retirement.
Assuming you’ve picked a good pension plan (i.e. one in your own name, that other people can’t change the terms and conditions of, which doesn’t have terrible investments held within it), there are three main things which affect the future value of your pension plan, in order of how much of an impact each one has:
1) How much you pay into your pension plan: The more you pay into it, the more you will get out of it
2) How long you save for: The longer you save and invest your pension plan, the more it will be worth
3) What it is invested into: This determines the investment return and the fees/charges you pay over time
It is a medium-long term investment (depending on the specific options you choose), not just from a financial perspective, but also an investment in yourself – your financial situation in the future is a direct result of the financial decisions you make in the present – this is always true, whether you’re young or old. A (good) pension plan is one of the most important ways that you can make sure that you are not financially struggling when you are older – you can’t avoid being old in future, but you can avoid being poor in future!