Pensions
T: 01329 833152 E: enquiries@activewealth.co.uk
If you’re working, you’re usually paying National Insurance contributions (NICs). This means you’ll be eligible for a basic State Pension.
It’s a start but it may not be enough to give you the standard of living you want. So you’ll need another source of income as well. There are other types of pension,either offered through your employer or ones you can start yourself.
They are all long-term investments which you usually pay into throughout your working life. Depending on the type of pension, your employer may also pay in to it. You get tax relief on money you pay in, and your money is invested in stocks, shares and other investments to try to make it grow.
When you retire, your pension fund is usually converted into pension income which is paid to you till you die.
You don’t have to stop work to take a stakeholder pension or personal pension. You can take a pension from your employer’s occupational pension scheme and carry on working for that employer, as long as scheme rules allow this.
Key Points
Your retirement can last 20 or 30 years – maybe longer, so you need to be prepared – you may be living on your retirement income a long time. Try to think about how much income you’ll need. Work out how much you’ll want to spend (using today’s price levels).
If you decide to use a pension to save for your retirement, it may be a good idea to start one as soon as possible. If you put it off by just a few years, you could end up with a much smaller pension.
Find out if your employer offers a pension scheme and whether they contribute to it. You cannot take your money out of a pension until you are at least 50 (this is going up to 55 by 2010). Many schemes give you a statement each year with details of your possible income at retirement.