The economic forecast seems certain that tough times are ahead. As household budgets are being squeezed, it can be hard to look to the future. Yet making sure you plan for retirement becomes even more important.
While the government’s triple lock on pensions has been upheld, it is vital you put extra away to enjoy your later years. Below, we give a brief guide on pensions for Brighton residents.
UK State Pension
The UK state pension is given to those who have paid the necessary National Insurance contributions. It currently stands at £185.13 per week. You may get more than this if you defer receiving your pension or if you have paid more than the necessary amount.
The state pension age is no longer 65 years as it was in the past. The age at which you can receive this depends upon the year you were born. Previously around 66 years for people, it is now increasing. You can find more information on the UK Government website. For many, this means getting a private pension earlier is a sound option.
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Private Pensions
Private pensions are ones that you pay into yourself. They work by giving a certain amount of funds to a company, which then uses it for investments. When the time comes, you can then receive your money back as instalments, or a lump sum, usually with added interest. However, they all tend to work in different ways. The most popular are below.
Self-Invested Personal Pension (SIPPS)
A self-invested personal pension, also known as a SIPP, gives you a lot of autonomy over how the money you pay is invested. You save money, invest it, and built a pot with the guidance of a financial advisor. For example, you may choose to only invest in companies that have sound ecological principles, or decide to invest in tech.
A range of SIPP providers is available, some better than others. You should choose one based on its fees, customer service and range of products for investment. For example, as this super detailed Hargreaves Lansdown review shows, their ratings for excellence go above and beyond. Also scoring highly for account opening and their trading platform, they are one of the top providers in the country.
Group Personal Pensions
These types of pensions are usually arranged by employers. They approach a company that offers a service, where a small percentage of a worker’s payroll is placed into the pensions fund. This is optional and contributions can also be made by the company. While they seldom offer autonomy they are a good way to build up a small pension pot with very little work on your part. As an example, Marks and Spencers have its own quite in-depth one set up for employers with websites and log-in portals. They fall under the umbrella of defined contribution pensions.
Another type of pension you may be offered by an employer is a defined benefit pension. These have declined in recent years and are also known as final salary or carer average pensions. They give a definite guaranteed amount at the end of your career. This depends on how much longer you worked for them and how much you earned.
