What is a pension?
There are four main types of pension, which are very briefly described below. For more details delve further into the site.
- The personal pension.
- The company/occupational pension.
- The stakeholder pension.
- The state pension.
- The personal pension.
This is where an individual has an agreement with a pension provider, to save money for their retirement. The pension provider will manage the funds based on the choices the individual has made.
The company/occupational pension
Occupational pensions are a form of deferred compensation. Usually, they are beneficial for both employer and employee through tax savings.
The stakeholder pension
Stakeholder pensions are a new type of personal pension that were brought in to try and make things fairer by limiting fees.
The state pension.
The basic state retirement pension to a single person is approximately £3150 per annum. This is lower than the income support threshold. So those with no other income can top up with income support. Pensioners today are being paid for by current taxpayers. Therefore, in the future state pensions will not be able to cater for the majority of the population. The government is therefore actively encouraging other forms of personal pension.
It is best to use a Financial Adviser
It is our firm belief that if you want to buy a personal pension, your best bet is to talk to a financial adviser. Getting information on the market so you are not bamboozled by terms and semantics, and then search online or use personal referral to get in touch with an adviser. Financial advisers are legally obliged to give the best advice. They will have access to software that enables them to sort through the available pensions and should be able to quickly establish some options to meet your risk profile. What is risk profile? I hear you say. More of that later…
Three suggestions to ensure you get the right pension.
1. Shop around.
A pension is probably one of the biggest purchases you will ever make. Different pensions will provide different features and benefits so it is important to choose the right one for you. Do this by selecting a financial adviser, with access to the whole of the market. They will guide you through the process and provide you with the best options that are available.
2. Charges and flexibility.
Charges and flexibility are the key considerations when choosing your pension. Ask your financial adviser to explain more about the implications of the charges and flexibility of the pensions they are considering fully.
3. Be honest with yourself.
Be honest with yourself about how much you should save. Think about how much your retirement will really cost. What standard of living do you want? How much will your leisure pursuits cost? Then later, what would be the cost of any care and medical treatment you may require.etirement planning, tax and wealth management.