Pensions Blog

Posted on December 28, 2011 by admin

Planning for your retirement is extremely important and unfortunately some people seem leave it until it is too late to plan for a secure and comfortable standard of living in those later years. A common argument against this is the idea that the basic state pension will be more than enough to live on during retirement, but this is simply not true.

There have been many reports from people currently living on the basic state pension who claim that money is extremely tight. In fact money is so tight that statistics argue that some 1.8 million pensioners are actually living below the poverty line. The money that is received from the government is simply not enough to cover food, fuel and utility bills that need to be paid in order to survive. There are a whole number of articles in the press that relate to this problem, each one describing more horrendous living conditions then the last. But even though this topic area has received a fair amount of publicity, very little has actually been done in order to tackle this problem. Some people will argue that this problem has simply been brushed aside, and the fact that the government are now thinking about changing the qualifying age for a basic state pension has done little to reduce these claims.

Currently the qualifying age for a basic state pension is 65 years of age for both men and women, but this is set to change to 67 years between 2026 – 2028. This is bad news for people who are in the middle of the careers right now, as this could potentially mean enduring another two years of work. So whilst the age limit is set to increase, this does not necessarily mean that the amount of money received is going to be increased with it. Even if the money does increase, with over 15 years to go it is likely that this will be due to inflation. All of this translates into financial problems for the future if you are considering living solely off a basic state pension during your retirement. However, the government has hit back at these claims. They argue that increased life expectancy has impacted the qualifying age for a basic state pension, and that more people are choosing to work in their retirement years. In addition to this, they also argue that millions of pounds will be saved in tax payer’s money which could be put towards better uses.

So whilst these cutbacks will benefit most people in the country who are at the earlier stages of their careers, there will be consequences during their retirement and for the older percentage of the population. This is bad news for those who are concerned about the age limit, but even this does not change the fact that the amount of money received is to low. This again reverts back to the original problem. The more money that is paid towards state pensions, the less money that there is available in form of public spending. The counter argument against this is that the people who are approaching retirement age deserve the money the most, as these people have been working all their lives and have contributed the most to society. This topic is a tricky political situation that does not look like it is going to be resolved any time soon.

Even if the qualifying age and the amount that you can expect to receive changed in a way that was beneficial to you, it is still a good idea to gain an additional pension plan. Even though it can be argued that a basic state pension is not enough to live off, it can still be seen as an extremely useful luxury. In many countries that are not welfare states, the idea of a free state pension is something that can only be dreamed of. And while they may not be compatible with this country’s living costs, they can contribute to expenses associated with it.

Another good aspect of the basic state pension is that it can provide you with a guaranteed income until the day you die. Not all pension schemes have the ability to do this, but if this type of security is something that you value then maybe an annuities scheme should be looked at. Annuities can also provide a guaranteed income, but the payments that come with these are often a lot easier to live off when compared to a basic state pension.

Overall then, there are many debates that surround the basic state pension and pensions in general. Some people will feel cheated that the qualifying age for a state provided one seems to be constantly changing, whilst others will be grateful for the increased public spending that comes hand in hand with this adjustment. Regardless as to where you stand on this matter however, it can always been seen as a good idea to gain an additional pension scheme other than the one that is provided by the state. This will without doubt ensure you a more comfortable standard of living during you’re retirement years, and can also provide you with the peace of mind that comes with knowing that you will be financially secure for the future. The pension plan that you decide to gain can then be combined with your basic state pension, but it must be emphasised that it is extremely hard to live off one of these alone.

Personal Pensions

Posted on December 28, 2011 by admin

When it comes to pension schemes, some will say that the basic state pension is enough to live off. Others will argue that retirement is years away, and that they do not have to concern themselves with such bland and uninteresting thoughts. But this couldn’t be further from the truth. Time moves fast and before you know it, you will be receiving a pension that will either be sufficient or insufficient due to the choices that you make now. Planning for a comfortable standard of living for your retirement is essential, but unfortunately it is something that a lot of people put off until it’s too late.

Some fortunate people may receive an occupational pension. These are provided by the company that they work for and can generate a rather generous sum of money over time. An occupational pension may or may not be enough to provide financial security for the future, but to ensure that they are it may be a good idea to combine them with a personal pension.

There are numerous personal pension schemes to choose from. These can range from investments to basic saving schemes, but regardless of what option is gained they all aim to provide you with a steady income for your retirement. The people who will benefit from these schemes the most are people that are self employed or do not have access to an occupational pension. Some people who fall into these categories will argue that a basic state pension will be sufficient, but unfortunately this simply not the case. A basic state pension combined with a decent personal pension will be sufficient, but on its own they are notoriously difficult to live off.

A decent personal pension scheme will allow you to build up a reasonable amount of cash to live off for your retirement. This can be gained at any age (although they usually start from around 55 years and onwards), and they can provide you with regular instalments and peace of mind. Most personal pensions have a number of tax benefits, as well as having good interest rates which also make them a lot more appealing. By taking advantage of these benefits, you can get the best out of your money for the long term and ensure a good level of financial security.

Like a number of retirement and pension schemes, personal pensions can be combined with additional policies for maximum security. For example if one pension scheme was to run out of money, then an additional policy could be used as a back up or to boost a flagging income. This is especially true with regards to a self invested personal pensions or SIPP’s. SIPP’s work in a similar way to standardised personal pensions in that a sum of money is saved each month for use in the future. But instead of saving this money, a SIPP plan invests it into various sectors of the financial market. You choose what it is you want to invest in and if you’re not sure, then it is advisable to enlist the help of a professional. There are of course a number of risks that are involved, but this type of scheme could turn out to be a lot more profitable than a standardised personal pension. If this pension policy appeals to you, then it may be worthwhile combining it with additional scheme in case it does not live up to expectations. By doing this you are guaranteed to have something to fall back on for your retirement.

Anyone can benefit from a personal pension, and if you already have a decent policy then it can be made a lot more secure by gaining an additional scheme. As a general rule of thumb, the more you put into a personal pension the more you will get out of it. So if you don’t have one already, get one today and ensure that you have a comfortable retirement by planning for your future now.

Occupational Pensions

Posted on December 28, 2011 by admin

If you have access to an occupational pension scheme then count yourself lucky. These are pension schemes that are financed and provided for by your employer, which will then allow you to gain an income during your retirement. There is no legal requirement that forces a company to provide you with an occupational pension and if you manage to get one then this is often seen as a great perk of your job.

If you are fortunate enough to gain a pension, it is likely that you will receive one of two types; these are usually salary related schemes or money purchase schemes. A salary related pension scheme analyses the amount of money that you earn on a yearly basis for the company you work for. The salary and the length of time that you have worked will be the main factors looked at when assessing how much you will receive in terms of pension payments. This can be compared to a money purchase scheme which uses a more standardised method of planning for retirement. Money will be paid into a pension savings account which will accumulate a large amount of funds over time. This is provided by your employer on a regular basis and the longer you stay with a company, the more money you can expect to be saved. When you approach retirement age, the money that has been saved is usually used to purchase annuities which can provide you with a great deal of financial security for your future.

Unfortunately there has been a steady decline in the amount of people who are fortunate enough to receive these pension types. In fact, statistics show that the number of people who receive an occupational pension has fallen by over 3 million in the last 40 years. This is quite depressing news and it is set to get worse, as the current economic climate is having a huge effect on the number of jobs available and the pension’s schemes that come with them.

If you do not have an occupational pension, then it is strongly advisable to gain a personal pension. These schemes are intended for those who are either self employed, or not fortunate enough to be provided with a retirement plan by their employers. There are a number of personal pension schemes to choose from, all of which will allow you to gain some sort of financial security for the future. Securing yourself financially for the future is often seen as a necessity, because it is notoriously difficult to survive on a basic state pension alone. This means that an alternative option to an occupational pension will definitely need to be looked at if you intend to have a comfortable standard of living during retirement. The majority of pension schemes usually have a number of tax benefits attached to them, so this is yet another reason as to why they should be considered.

There are no real drawbacks to gaining an occupational pension, and for maximum security these can be combined with additional pension types. Some people may argue that gaining an occupational pension makes them feel “tied down” to a job, but many people often receive a number of these throughout their lifetime. As long as you do not breach a contract that has been outlined between you and your employer, it is possible to claim funds from numerous occupational plans during your retirement. In fact in some cases, it is possible to transfer your current occupational pension scheme to another company. This means that your savings are simply transferred to another company’s scheme, and you can continue to receive payments assuming that they provide occupational pensions. This allows you to have one main occupational pension scheme, as opposed to numerous schemes that you may receive during your working career.

Overall, occupational pensions are great for those who receive them, but not so great for those who don’t have access to one. If you aren’t so lucky, then it is essential to gain a personal pension. This will allow you access to financial security for the future which is absolutely essential, especially in this uncertain economic climate. Occupational pensions are in decline and without question they are becoming more of a rarity, but regardless, everyone needs to plan for the future to ensure a comfortable standard of living during retirement.

Annuities

Posted on December 28, 2011 by admin

There are numerous ways in which a financial security can be guaranteed for the future. Pensions plans are the most common method of doing this, but not all of them can actually guarantee security, even though they may be able to provide you with a reasonable income.

Pension schemes use a number of methods to generate income for the future and these can be through the use of investments or savings. By using a pension plan, you will be able to gain some tax benefits as well as systematic payment structure that will allow you to plan effectively for your future. Any kind of future planning or investment scheme is a great idea, but arguably there are better schemes out if financial security is of top priority. Unfortunately standardised pensions schemes may run out, because in many cases they are only as valuable as the money that has been invested into them. This goes for occupational pensions as well as personal pensions as it is not uncommon for the money to suddenly dry up due to a lack of funds.

Annuities on the other hand don’t have this problem. With annuities you are guaranteed to receive set payments on a consistent basis for the rest of your life. These are relatively simple and can even be combined with a standardised pension plan for maximum security. Firstly you will have to undergo a brief medical examination which will assess the level of health that you are currently in. Once this is done you will pay a certain amount of money based upon your medical results, which in turn will enable you to gain set payments for the rest of your life. This guarantees financial security for your future which is often overlooked or simply not possible with traditional pension schemes. In many cases annuities will also qualify for the same tax benefits, which can give the impression that annuities are a better financial choice.

However, there are issues with annuities that will need to be mentioned. The initial price to purchase these can often be quite high and although they promise payments for the rest of your life, these payments may be quite low. This of course will vary from company to company and so it is definitely worthwhile shopping around, but some people will still argue that better deals can be gained from differing pension types.

There are numerous pensions that are available to choose from and it can be argued that some of these do provide better deals, investment pensions for instance is a good example of this. Investment pensions can potentially generate an unlimited amount of cash, but this all depends on how well the investments do. In essence this is a risky pension type that has the power to secure a very comfortable standard of living during retirement, but at the same time it offers no guarantee. So while there may be a number of pensions schemes out there that seem to offer better deals, this might not actually be the case as no guarantee or security is provided. In an ideal world, a pension scheme like an investment pension would be combined with annuities in order to gain maximum financial security. Whilst this is an excellent idea, having numerous pension schemes is not something that everyone will have access to. Unfortunately this is true, but every citizen of the UK does have access to a basic state pension. Like annuities these also provide guaranteed payments, so if you have annuities and combine them with a pension that is provided by the state then it is likely that you will have access to a financially secure future.

Annuities are fairly flexible in the sense that they can be purchased on there own, or they can be combined with any other type of pension plan. They provide maximum security which other pension schemes do not, and they allow for easy budgeting and financial planning for the future. It can be argued that they are quite expensive, but due to the level of security and stability that you are definitely going to receive they are a great plan for the future.

State Pensions

Posted on December 28, 2011 by admin

The UK is a welfare state, meaning that the government provides for its citizens. This can be seen through free education, healthcare, benefits and in this case free state pensions. Currently the qualifying age for a free state pension is 65 years. This is set to change in the future, but providing that you reach this age regardless of your job or social status you have access to a set amount of money each month. Alternatively, it is possible to gain a one off lump sum, but regardless of how you receive your payment this something that everyone is entitled to.

Whilst in theory the idea of a state pension is good, it has come under a lot of criticism from various people. Many claim that a state pension is a huge drain on the countries financial resources, whilst others argue that it simply does not pay enough to ensure a reasonable standard of living. In fact there have been many stories in the media about pensioners finding the basic state pension extremely hard to live off, and so ideally this should be used in conjunction with another pension scheme. However not everyone is fortunate enough to have an additional scheme, and so state pensions have become a hot political topic in recent years.

One proposed idea that has been put forward by the government is to move the qualifying age. This is because life expectancy has increased and more people are choosing to work beyond the standard retirement age of 65. Because of this, it could be argued that less people need access to a basic state pension, and by moving the qualifying age millions of pounds of taxpayers money can be saved. Whilst this is true, it does not tackle the fact that living on a basic state pension alone is very difficult, especially in the winter months. There have been extreme reports of pensioners living below the poverty line and generally speaking the idea of a state pension has received a lot of negative press.

These reports may or may not be true, but even so a basic state pension can provide elderly people with a secure income from an already extremely tight public spending budget. In many parts of the world this something that people could only dream of, so in some ways we should be grateful that we have access to this luxury, but at the same time it may not be sufficient to provide a comfortable standard of living.

As already stated, combining a state pension with an additional pension is arguably the best way to gain financial security for the future. If you don’t have access to a pension plan, then it may be a good idea to buy annuities. These can provide you with a guaranteed income for the rest of your life. The good thing about a state pension is that they can be combined with any policy and they are guaranteed. They can provide you with a much needed financial boost, which in turn will make your own pension scheme more valuable.

If you are an individual that has a dual nationality, it is actually possible to claim two state pensions providing that you are a citizen of two welfare states. A good example of this is the UK and Sweden. By falling into this category, it is possible to claim a large amount of money which will definitely make retirement a lot easier. This is something that numerous people are unaware of, and because of this they are missing out on some valuable additional payments.

State pensions are an excellent scheme, but in order to get the best out of them they need to be combined with an additional pension plan. It can be argued that they do not pay enough on there own, but with the help of an additional scheme they can be extremely helpful. Being financially secure for the future can be seen as a tricky task, but by gaining a quality pension scheme you are sure to have some control over it. Combine this scheme with guaranteed payments from the state and you will be one step closer to financial security later on in life.