The right pension can hold the key to a comfortable retirement. Explore how pensions work and how to get the best from them.
Pensions may not seem the most exciting subject, yet their benefits can last a lifetime. So, how can pensions work for you? On this page we look at defined contribution pensions, which are the most common pensions these days.
Read on to find out:
In its broadest sense, a pension is the money you live off when you are older and no longer working.
There are different sorts of pensions that behave in different ways but, in general, you pay into a pension during your working life and use the money saved to create an income in retirement.
From setting up a scheme to withdrawing money when you retire, the pension life cycle generally follows these stages:
Join your company pension scheme or set up a private pension such as a Self-invested Personal Pension (SIPP).
Key things to remember:
The Government offers a range of generous tax incentives to encourage retirement saving.
Key things to remember:
The money you pay into your pension doesn’t have to stay in cash. If your scheme is set up as a defined contribution plan, it’s used to buy investments. The idea is that these investments grow over time, helping you build a large enough pot to see you through retirement.
Key things to remember:
You’ll need to pay fees to your pension provider for looking after your money, and to any investment companies investing on your behalf. There may also be other fees depending on the service you choose, for example you may want to pay someone to manage your investments.
Key things to remember:
A small monthly pension contribution can easily build up over time, especially when tax relief and employer contributions are factored in. Try to save with the long term in mind.
Learn about the power of compounding
Although you’re not going to use the money for a long time, you shouldn’t ignore your pension. Regularly review your investments to ensure you’re comfortable with your choices and they’re performing well.
Key things to remember:
You’ll have a range of options to create a pension income on retirement, although some pensions offer more flexibility than others.
Key things to remember:
The benefits of entering a pension scheme in the UK include:
Please see Important information below
Explore how a pension works, the key pension rules in the UK and your pension options with our experts.
How do I find out what pensions I have?
You can normally find out what pensions you have by checking with your former employers and providers. The Government also offers a Pension Tracing Service that might help you track down schemes you’ve lost touch with. This service can offer contact details for businesses and providers.
When can you access your pension?
You can access your pension savings from the age of 55 if you’re a member of a defined contribution scheme. Those with more traditional defined benefit pensions might have to wait until they’re 60 or 65, however. It all depends on the rules of your scheme.
Can I take my pension at 55 and still work?
Yes, you should normally be able to make pension withdrawals at the age of 55 and continue to work. Just be aware that your pension will have less time to grow if you decide to take money from it early.
Our friendly team can help you with any concerns you have about your investments
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