Have you planned your Pension?
Today more than ever it’s important to think about how you will support yourself when you retire. There are lots of ways to guarantee an income when you retire but the most secure and effective method you can use is to start saving for a private pension today.
Your pension plan and planning for retirement
Whether you are eighteen or fifty, if you don’t have a pension plan you need to get one as soon as you can, especially when you consider how few companies now offer adequate pension schemes as part of their provision. Although it’s possible to use your savings as a sort of pension when you retire you won’t enjoy the same tax benefits as you would with an official private pension and your money may not be as well protected as it would in a pension fund.
When you set up a personal or private stakeholder pension you can put funds into it whenever you like, whereas with a company pension the amount you can pay into it may be limited, although if your employer does offer a pension scheme it’s still useful to have.
Types of private pension
There are two main types of private pension that are used in the UK. These are group stakeholder pensions and group personal pensions. In recent years and in the wake of pension controversy when many people lost their pension money, the amount that you can pay into a private pension scheme has been increased so that UK residents don’t need to rely solely on company pensions.
If you choose a stakeholder pension you can save up to £3,600 every year but you will be charged less interest than you would with a traditional pension. With a stakeholder pension you can legally only be charged up to 1% each year in charges. Many people who choose a stakeholder pension also feel that it is a more flexible option than a traditional pension.
A group personal plan is like a company pension but on a smaller scale. This type of pension adheres to the same rules as a personal plan so you can save a greater amount of your earnings than you would be able to do with a company pension.
If you opt for a personal pension you can choose to invest your money into many different areas, but as with any investment there is always a risk of losing out.