Pensions schemes have received a lot of bad press in recent years. With Gordon Brown’s highly controversial and damaging raid on pension funds, and the crash of such institutions as Northern Rock and Equitable Life, people are understandably jittery about parting with their hard-earned cash. But it is vital to plan for retirement so that you can enjoy comfort and security. Pensions can be broken down into four basic categories: state, company, personal and stakeholder schemes.
State pensions will change and fluctuate as the years pass, and governments change; similarly public sector pensions will be dictated by government policy, although the winter strikes led by public sector unions might hope that they will be able to influence such policies.
Workplace or company pension schemes will vary enormously from company to company and you should pay careful attention to what is on offer when you accept a job offer. Personal pensions plans (PPPs) and stakeholder pension schemes (SHPs) are both essentially investment policies. An SHP differs from a PPP in that it must adhere to a series of standards outlined by the government.
People always have many questions about how to best go about make the safest and most appropriate arrangements, but one of the biggest current concerns is how secure is a pension and what is available to give you more confidence in making a plan?
Safeguarding a pension plan
Protections are available if you have concerns about your pension scheme. Safeguarding measures include Pension Protection Funds (PPFs). If the company you work for goes bust, this will provide a certain level of compensation. It is however only available for certain schemes. The Financial Services Compensation Scheme (FSCS) might also provide a degree of recompense if your company or the institution you have invested with is unable to meet its pension payment commitments.
With so many complex issues involved, it is very useful to take on a reputable financial advisor. One of the best options to safeguard your money is to ensure you don’t put all your eggs in one basket. By all means set up an annuity to give you a guaranteed income every year on retirement, but there are other options that you can add to your personal retirement plan.
Consider investing in different areas such as the stock market, property and a whole raft of financial products from ISAs to bonds. It really depends on the level of risk you are prepared to take as an individual.
It is also key to re-evaluate your pension plan as time passes and economic conditions fluctuate, and to tweak it to accommodate these fluctuations. A financial advisor can help you with all these decisions.
A great source of information is the pension advisory service. It will offer advice on all aspects of this crucial financial decision-making process. With a hotline for queries, Q&As, a pension planner and much more, many of your most pressing concerns will be answered.
also provides clear basic information to help demystify pensions, how and why you should plan, and offers lots of useful contacts, and www.moneysavingexpert.com
offers advice on pensions and investing as well as on many other financial issues.