Private pension schemes
If we’re going to live longer and want a ‘financially secure and comfortable retirement’ we’re going to have to plan it – and, ideally, we really need to start doing that at the start of our working lives rather than at the end of it.
Most of us will qualify for a State Pension. For tax year 2024-25, this is either £8,844.27 per year for the ‘old’ basic State Pension, or £11,541.90 per year for the ‘new’ State Pension – making it easy to see why the State Pension is generally accepted as being insufficient to live on. Many of us will supplement our State Pension with some form of workplace pension but, probably, only as a result of the introduction of auto enrolment. So, what else can we do? What happens if we’re self-employed? What happens if we don’t qualify for auto enrolment? What do we do if we want a true ‘belt-and-braces’ solution?
Fortunately, there are a variety of private pension schemes on the market to choose from. All are defined contribution schemes that, quite often, can be tailor-made to meet what you want in terms of contribution value, length of term, involvement and the level of investment risk you are prepared to take. Three popular types of private pension scheme are:
- Personal pension plan
A personal pension plan is a defined contribution pension scheme set up in your name and is one of the simplest, most straightforward forms of private pension scheme available. You choose a provider and then select a plan that best meets your personal circumstances and future needs. You make arrangements for your contribution to be paid into the scheme and that’s it: your pension pot builds up from the contributions you make, tax relief and any investment returns. It’s there for you, when you want it.
- Stakeholder pension
Stakeholder pensions were launched in April 2001; they’re defined contribution personal pension schemes which have to meet a number of standards set by government legislation, for example:
- They must have a default investment fund
- Management charges must be capped at a maximum of 1.5% of the fund’s value for the first ten years and must fall to 1.0% after that
- Members must be able to start, stop and switch providers at no cost
- Members must be able to pay weekly, monthly or in irregular lump sums
- The minimum contribution is just £20
Some employers offer stakeholder pensions as a workplace pension. In doing so they will have chosen the pension provider, may arrange for contributions to be deducted from your salary and they may contribute as well. If you change jobs you can continue paying into a stakeholder pension, transfer it or you can leave the fund and let it grow.
- Self-invested Personal Pension (SIPP)
SIPPs allow more control over how your pension pot is invested and act as ‘tax wrapper’ in which the various investments are held until you want to cash them in. They can have higher charges than other private or stakeholder pension schemes.
How can One Financial Solutions help you?
One Financial Solutions is here to help you. We’ll work with you, assess your current circumstances, review your retirement goals and help you put in place a pension strategy to meet them, ensuring that having a ‘financially secure and comfortable retirement’ isn’t something that’s left to chance.
We’ll assess the value of your State Pension and make sure you receive everything you’re entitled to. We’ll review any workplace and private pensions you may have and recommend any changes we feel are beneficial. If you need a pension scheme we’ll find one for you and, as a truly independent firm of financial advisers, we’ll select one from the entire market and make sure it’s the best one for you.
So, if you’re looking for specific help about any aspect of your pension or just want advice on the subject, please call us on 020 3714 9565 or ask us to call you by sending an email to email@example.com.