How do you
want to spend your life after retirement? Contributing to the right pension
scheme, can help you achieve the standard of living you have always wanted in retirement.
It is advisable to start contributing to a suitable pension scheme as soon as
possible. The later you leave it the
higher your contribution will need to be to achieve your retirement income
objectives., In the UK, there are many different pension schemes available, and
knowing what they are can help you pick the best option. Here is a quick guide
to the types of the schemes available:
- Stakeholder/personal
pensions –a type of defined contribution pension. You choose the provider
and make arrangements for your contributions to be paid. Some employers
offer them, but you can start one yourself. and regularly make
contributions, which you can withdraw at retirement.
- Workplace
pensions – All employers must now offer a workplace
pension scheme and automatically enrol eligible workers in it. You and
your employer can make contributions to it and you can withdraw it at
retirement.
- SIPP – The
Self-Invested Personal Pension is a pension ‘wrapper’ that holds investments until you
retire and start to draw a retirement income. Similar to a standard
personal pension but tends to give you more flexibility with the
investments you can choose. You make contributions and withdraw it later
at retirement.
- Drawdown
pensions – A flexible scheme lets you withdraw the benefits from a
Registered Pension Scheme and the savings will be invested and available
for withdrawal at retirement. Your income will vary, as it will depend on
the type of investment or how the fund performs.
- Final salary pensions
– Retirement income is based on how many years you’ve worked for your
employer and the salary you’ve earned. It promises to provide a guaranteed
income for your entire life after retirement. They
usually continue to pay a pension to your spouse, civil partner or
dependants when you die.
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