There
are many types of pension schemes available in the UK today. It is important to
understand the value and worth of your pensions.
Having
a good pension pot scheme will help give you the standard of living you want
for retirement. ‘Pension pot’
refers to a type of pension you build up with pension contributions you and/or
your employer make. Many employers encourage their
employees with all kinds of UK pension schemes
to get them off to a good start. There is the option to opt out but it’s
generally a good idea to contribute towards your pot sooner rather than later.
So,
in order to understand what the pension schemes are all about, or how to
segregate them, let us look at some of the schemes and their features.
- Workplace
Pensions – This is a pension provided by the
employers and the scheme. Depending
on the scheme you’re in, the employer and employee will both make contributions
to the pension fund and the amount can be withdrawn by the employee as a
pension at retirement.
- Personal/Stakeholder
Pensions –The pension is generally independent
of your employer, and you pay the whole contribution into the pension
scheme you have chosen. You have the choice of selecting the provider and making
regular contributions to be withdrawn at a later date at retirement.
- Drawdown
pensions – This is a flexible method that allows you
to withdraw benefits from a UK Registered Pension Scheme. Your pension
savings will be invested and are available to withdraw at retirement. The
income you get will vary depending on how the fund or the type of investment
has performed. This should be done with the help of a qualified financial
adviser
- SIPP
– This pension is known as a
Self-invested personal pension. A tax wrapper that holds and controls
investments. An individual can deposit their UK pension regularly in this scheme
to be withdrawn later at retirement.
There
are several pension schemes out there which can be beneficial depending on your
requirements. Get the best advice possible to ensure you make the right
decision to enjoy your retirement.
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