A personal pension plan provides you with an income in retirement (If you are already approaching retirement please visit our retirement advice page). Your contributions are invested to give you a retirement fund that you can use to provide a taxable retirement income and also the option of a tax-free lump sum. They are independent of the basic state pension and any company pension that you may have.
Independent Pension Advisor Glasgow
Personal pensions give you control over how much you contribute and where the money is invested.
The more you put in, the more money you have to invest for your future – and the better your underlying investments perform, the higher that value will be. Note that not all investments perform equally.
There are three basic types of personal pension plan and the one that is best for you will depend on various factors including your age, how much you are able to contribute and your attitude to risk.
The simplest pensions, Stakeholder Pension Plans are designed to encourage lower earners to save for their future and are subject to restrictions on charging, meaning they can be a cheap and efficient way to start saving. Because of the cost limits, the range of investments might be restricted, as may some of the additional options, but you will usually find index tracker-type funds and multi-asset managed funds which will suit most people’s basic needs.
Individual Personal Pension Plans pensions offer access to a range of different funds and may have added benefits which will make management easier if you are looking to add value over a basic managed or tracker fund, or switch around different types of investment. Individual Personal Pension Plans are not subject to the same charging restrictions as Stakeholder Pension Plans so the fund choice can be wider and they suit most pension requirements for most people.
SIPPs are the most sophisticated personal pension plans and allow a huge amount of investment flexibility if you are either very active in your investment allocation or adventurous in your choice. SIPPs can give access to funds, shares, bonds, gilts, property and cash – and occasionally some more esoteric investments as well. They therefore allow you to build a portfolio specifically tailored to your needs and make adjustments to that portfolio whenever and however you like.
When you have the answers in mind, seek professional pension advice from a trained advisor will help you make the best decision for your retirement. The earlier you begin putting money away, the more those contributions will add up over time and the longer they will have to grow.
Learn more about your personal pension options and the best pension plan for your needs by contacting us today on 0141 764 0040 (Glasgow) or 0207 112 8654 (London).
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