This is a workplace scheme where your pension income is based on-
The reason that it is called a defined benefit scheme is that your pension income is not reliant on investment performance.
There are not many of the schemes remaining as employers found them expensive to fund.
With this type of pension plan, your retirement income is based on-
This type of pension may be personal, stakeholder or one arranged through your employer. Most pensions now are defined contribution schemes.
This pension is provided by the government when you reach a certain age. The amount you receive is based on your National Insurance record. In recent years we have seen the state retirement age rise. This in part is because we are living longer. The amount you receive is unlikely to be enough on its own to live on, but it may help to top up your company and/or your private pension.
This is where your employer will enrol you into a pension scheme when you are age 21 or over. You have a choice to opt-out but will be re-enrolled every three years. Both you and your employer will contribute as laid down by the government. You will receive tax relief on the percentage of the salary you pay in. Both you and your employer can pay more into the scheme if you wish.
A self-invested personal pension (SIPP) is a pension ‘wrapper’ that holds investments until you retire and start to draw a retirement income. It is for sole investors and works in a similar way to a standard personal pension. It is popular with self-employed, who do not get a company pension With a SIPP, you have more flexibility with the type of investments you can choose. SIPPs are also good if you want to consolidate various pension pots.
With income drawdown, you can take money out of your pension when you need it. These types of plans offer more flexibility than say, an annuity. This may help with any tax planning. However, the value of your fund is not guaranteed. Your investments may go down as well as up in value. Taking independent financial advice is important.
Recent pension changes have had a positive impact on people’s feelings towards retirement and given them more choices to help achieve the retirement they want. Presently from the age of 55, you now have access to all the money that’s in your pension pot. However, HMRC propose to increase the minimum retirement age from 55 to 57 in 2028, at the point that the State Pension age increases to 67. From then on, the minimum pension age in the tax rules will rise in line with the State Pension age so that it is always ten years below.
Remember, you need to be aware that this pension pot must last you a long time, as most people underestimate how long they will live. Consideration also needs to be given to any tax that might be payable.
We feel that it is important that you take independent advice through Anstee & Co so that you can consider all the options. We can help you understand all this “Pension Jargon”.
We are a firm of Independent Financial Advisers (IFA’s). This means that the financial advice we offer is unbiased. We will recommend the best solution for you from products from across the market.
Whether you’re thinking about saving into a pension for the first time or making decisions for your retirement, we are always aware, that you must make the most of your money.
Why not arrange a meeting today to see how we can help you understand all this “Pension Jargon”. The initial consultation is free and without obligation. Meetings can be arranged at a time or location that is convenient for you. This may be at a weekend or early evening. We can come to your home or you can come to our offices located at-
Also, our financial planners live and make use of meeting rooms in-
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The information contained in this article is for information purposes only and does not constitute advice. No action should be taken based on this information alone.