Guide to pensions
27th April 2012
A pension is the most obvious way to plan for retirement, ensuring when you finish working you’ve got a sufficient nest egg to enjoy your life.
There are a variety of different pensions available to you, including company, stakeholder and Self Invested Personal Pensions (SIPP). Here’s a quick guide to your options.
When planning for your retirement, one of the first things to look into is your entitlement to a State Pension. The amount you receive through this will depend on your circumstances, but to get a forecast in relation to this it’s worthwhile getting in touch with the Department of Work and Pensions.
You can also obtain a State Pension forecast from an Independent Financial Adviser.
You may be offered a Company Pension from your employer. There are different Company Pension schemes, depending on your employer. They may offer you:
A Final Salary Company Pension Scheme – this will be based on your final salary and the number of years you have worked for your employer
A Defined Contribution Company Pension Scheme – this will be dependent on contributions made throughout your employment
Under both types your employer will make contributions and you may also be required to do so. It’s also usually possible for you to make voluntary contributions if you wish. Company Pension Schemes can sometimes be complex, so it may be worthwhile speaking to an Independent Financial Adviser.
These are used by people who want to ensure they have the necessary income upon retirement. In most instances they are for people who are self-employed, but that isn’t always the case.
One option for a personal pension is a SIPP. This enables you to invest your pension into a variety of investment opportunities including companies registered on the stock exchange, government bonds, corporate bonds, and investment trusts (amongst others). For the financial and investment savvy this is a great way to increase your pension and potentially set yourself up for retirement. Again if this is an option you’re thinking of looking into, securing financial advice is always advisable.
Stakeholder Pensions usually operate on a defined contribution basis, with the income you acquire based upon your contributions and a variety of other factors. After April 2012 employers will be required by law to make contributions to Stakeholder Pensions.
A pension is an integral ingredient for securing your financial future. With so many options available to you, it’s worth getting right.
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