Regular retirement income for life or for a set period
An annuity is a type of retirement income product that you buy with some or all of your pension pot. It pays a regular retirement income either for life or for a set period.
You now have more choice and flexibility than ever before
Following changes introduced in April 2015, you now have more choice and flexibility than ever before over how and when you can take money from your pension pot. It’s important to take your time to understand your options and seek professional financial advice, as what you decide now will affect your retirement income for the rest of your life.
If you’re self-employed, saving into a pension can be a more difficult habit to develop than it is for people in employment. There are no employer contributions, and irregular income patterns can make regular saving difficult. But preparing for retirement is crucial for you too.
The National Employment Savings Trust (NEST) is a low-cost pension you may be able to join through your workplace or if you are self-employed. Once a member, you can carry on saving this way even if you change jobs or stop working.
Providing greater flexibility with the investments you can choose
A self-invested personal pension (SIPP) is a pension ‘wrapper’ that holds investments until you retire and start to draw a retirement income. It is a type of personal pension and works in a similar way to a standard personal pension. The main difference is that with a SIPP, you have greater flexibility with the investments you can choose.
Minimum standards if you don’t want too much choice
Stakeholder pensions are a form of Defined Contribution personal pension. They have low and flexible minimum contributions, capped charges, and a default investment strategy if you don’t want too much choice. Some employers offer them, but you can start one yourself.
A personal pension is a type of Defined Contribution (DC) pension. You choose the provider and make arrangements for your contributions to be paid. If you haven’t got a workplace pension, getting a personal pension could be a good way of saving for retirement.
A Defined Benefit (DB) pension scheme is one where the amount paid to you is set using a formula based on how many years you’ve worked for your employer and the salary you’ve earned rather than the value of your investments. If you work or have worked for a large employer or in the public sector, you may have a DB pension.
With a Defined Contribution (DC) pension, you build up a pot of money that you can then use to provide an income in retirement. Unlike Defined Benefit schemes, which promise a specific income, the income you might get from a DC scheme depends on factors including the amount you pay in, the fund’s investment performance and the choices you make at retirement.
Tax relief means some of your money that would have gone to the Government as tax goes into your pension instead. You can put as much as you want into your pension, but there are annual and lifetime limits on how much tax relief you get on your pension contributions.
Hastings O'Loughlin is a business name of Hastings O'Loughlin Financial Services Ltd. Company No. 4502991. Registered Office at Hastings House, Birds Royd Lane, Brighouse, HD6 1LQ. Authorised and Regulated by the Financial Conduct Authority.