There are different types of pension, all with different features and benefits. Understanding what pension you’ve got and how it works is the first step to making sure your financial future is as secure as possible.
Personal pensions come in all shapes and sizes. The key things they have in common are that they will involve a personal contract between you and your pension provider, and their aim will be to provide you with an income in retirement. Plus, the value of your pension will depend on: how much you have contributed; how long you have saved for; how well your investments have done, and the impact of scheme charges.
Final salary pension
A final salary pension, which some employers provide as an alternative to a personal pension, guarantees an income for your retirement. The amount you receive is based on how long you have worked for the company and your salary on leaving.
Types of final salary pensions can vary based on whether you work for the public or private sector.
They come with very lucrative benefits and guarantees.
The State Pension
The State Pension is a means tested benefit that many people use to top-up their retirement income. Although it’s been around for over 70 years, the government sometimes makes changes to it. The most recent change was in 2018 when the State Pension age for women increased. And the age which men and women can receive it is set to change again in the coming years.
Will you qualify for the full amount?
Types of personal pensions
Types of final salary pensions
Types of state
Jamie Smith-Thompson says…
“Did you know there are different rules for different types of pensions? Some pensions can be accessed from 55 and some from 65. Some pensions can be left to your loved ones tax-free, and some pensions your employer pays in too. All these things and more should be taken into consideration when planning for your retirement. What would you discover if you looked into your pension today?”
Jamie Smith-Thompson, MD at Portafina