Know Your Pension Plans

We cannot keep on working throughout our lives. As we grow old, our efficiency in doing work for others reduces and we would like to take a break and just relax and enjoy the remaining days of our life. Old age is the time when we want to pursue those activities of life which we did not find time for while we were too busy working. However, old age is not always an easy life for most people. As we stop working, our savings no longer build up because we start digging into our savings for paying our bills. If money is an issue for us during our old age, we will not be able to enjoy our remaining life. To live a comfortable life during our old age, we need to have a steady source of income for which we do not have to work. Pension is the answer to your financial worries at an old age. It is important for us to know little important facts about pension so that we can start contributing to our chosen pension fund.

A government funded pension plan or Basic State Retirement Pension plan is the simplest of various schemes that you can opt for. Government specifies different age groups for man and woman at which they retire from work and are eligible to receive pension from government. To be eligible for full basic pension, you should have been contributing 90% or above of your working life towards building up this pension fund. The corpus, which you will receive once you retire, will depend on how much you have contributed so far for the National Insurance Fund. If you are a woman, you will receive this basic pension at the age of 60 years while your male counterpart will receive it at the age of 65.

Pension is the key to a financially secured future. There are other types of pension schemes available for you. Let us have a look at them too.

There are private players in the pension sector who invest your money in various instruments so that you can expect better returns on your hard-earned money. There is an associated risk with these schemes as they may invest your money in equity and stock markets, which are very volatile. However, it is a good idea to have this pension too in your portfolio of pension schemes. You can dedicate some small amount of money in such a scheme.

While working for a company if you notice a portion of salary deduction in your monthly pay slip towards any pension fund, you can be sure that this is a type of Occupational pension fund. Your employer can match your contribution or you can choose to contribute more money than what your employer is deducting currently. This is a disciplined way to build your retirement financial corpus. However, note that your additional voluntary contributions many not be binding on your employer and it may choose not to match your contributions. Therefore, it will be a contribution from your side only. If your company has a small number of employees, it may not opt for such a type of pension scheme and instead ask you to have a personal pension fund. We have discussed personal fund above in this article.

For working people whose income is below £30,000 or people who are self-employed, the best solution is to participate in a stakeholder pension plan. Even though a stakeholder pension plan is a sub-category of personal pension schemes discussed earlier, it is lot more flexible and is available to you at a much lower cost. You can save yourself from too many fees and recurring charges every year on your corpus. You may consult an independent financial advisor and enroll yourself for such a pension scheme. Your advisor can advise you the best scheme for you based on your age group and how much risk you can afford to have on your money.

There are various benefits of each of the schemes and you can opt for any one of them or can have all of them in your financial plan while saving for your retirement. You can take personal pension schemes from various players in the market after judging their products. Start early and finish smoothly. Start saving from today for a comfortable tomorrow.