All of us should have a retirement plan. Pensions are one way of saving money and ensuring that you don’t suffer after you’ve retired. In the UK, there are many benefits, especially tax benefits that make people consider this saving scheme. There are many other saving options, but a pension is what works for many people. Here are some things that many individuals ask about this retirement plan.For more information on pensions and specifically overseas pension plans, see here.
Types of Pension
There are three types of pensions: personal, occupational, and stakeholder. Personal pensions are those individuals arrange themselves. They’re sometimes referred to as money purchase or defined contributions. Some employers may also offer personal pensions in the form of workplace pensions.
The money contributed by an individual is used for investments such as purchasing shares. The amount you get depends on how much was paid as well as how you’ve decided to take your cash.
Occupational pensions also called company pension schemes are organized by employers to their employees. They may be either contributory, where one gives part of their earnings or non-contributory where your manager makes all the payments.
Stakeholder pension hasn’t been there for too long. It’s a new scheme introduced by the government which targets those who earn a moderate salary between £9,500 and £21,600 pa. But, even those without earnings can still get them.
What Do I Do If My Provider Doesn’t Have the Option That I Want?
Recent reforms allow pension providers to offer new options. However, in case yours doesn’t have these options, feel free to transfer your contribution to another at any age. But, note that this process may cost you a bit. Also, individuals whose pensions have special valuable features should seek advice from a financial expert first.
How Much Money Should I Save for Pension?
Most individuals wish that they retire with at least two-thirds of their salary at retirement. But this is hardly the case. Achieving this means that you save a significant amount of money, then also your fund managers have to perform at their best. But individuals should start saving early so that they have enough money when retiring.
If I Claim My Pension, Will It Affect My State Benefit or Pension?
Your State pension is very different from other kinds that you have. It’s based on one’s National Insurance history of contribution. If one takes any money from their retirement saving, it can affect their entitlement to some benefits. It’s therefore wise that someone talks with the Department for Work and Pensions, before taking money from their pension pot.
How Many Pensions Should I Have?
A person can have as many pensions as they’d like as long as they can contribute to them and remain with some cash for daily life activities. It’s not wise that your retirement saving schemes beat your annual or lifetime limits. But in most cases, this is usually rare. Only those people who’re paid huge salaries can beat that. However, note that some pensions have restrictions which can limit an individual from contributing. For instance, if you’re not working in a particular company, then you can’t contribute to their workplace pension.
Should I Use an IFA?
When choosing a retirement scheme, it’s best that one gets advice from an expert in financial matters. Most people hire Independent Financial Advisers (IFA). Their cost is different depending on their firm and sometimes your circumstances too. But you should research different firms about their price, experience as well as reputation. That’ll help you find an appropriate for them.