Pensions

Most people recognise that it is wise to plan for their retirement. This is especially true for those who are hoping to retire before the usual State Retirement ages.

Putting aside a regular amount of money during your working life is probably the most appropriate method to ensure that you will have sufficient income during your retirement. Investing into a Pension plan has historically been the most popular method of making these regular commitments. The tax advantages offered by the UK Government provide the opportunity for your Pension Fund to grow with virtually no tax.

We can help you in your choice of Pension Plan. Our helpful guides explain the differences between the various types of pension arrangement, whether you are employed, self employed or taking time away from day to day working perhaps as a carer or to raise your children.

Registered Pension Schemes

Schemes to provide pensions are called registered pension schemes*. There are four main types of pension scheme, called arrangements:-

Defined benefit arrangements

Benefits are determined by specific criteria, and are not dependent on the amount of any fund. A common type of defined benefits arrangement is a 'final salary' scheme, where the benefits depend on your salary and length of service, although many final salary schemes have closed since the recession in 2008.

Money purchase arrangements

Money purchase arrangements are also known as defined contribution schemes. Benefits are entirely dependent upon the funds built up for the member. Most arrangements made by individuals are of this type, as are many company schemes. The following types of pensions are normally money purchase:

Personal pensions
Stakeholder pensions
Retirement annuity contracts
SSAS - Small Self Administered Schemes
FSAVC - Free-Standing AVC schemes
SIPP - Self Invested Personal Pensions

Hybrid arrangements

These occur when a scheme promises some kind of minimal value, irrespective of actual fund performance.

For example the terms might be '1/60th for every year of service, or whatever the fund buys, if greater'. If performance was good then the full fund will be used and it will be a money purchase arrangement. If there was poor performance, then the scheme would pay out the 1/60th and be seen to be defined benefit.

Cash balance arrangements.

A type of money purchase arrangement where, in the event that the funding fails to provide the required level of benefits, it will be made up to that level.

For further information on Pensions please contact us on 0345 0945 445, we look forward to your call.

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