SimplyFinance - Pensions

Carefully Consider Before Opting Out of Your Pension

2007-08-04T23:00:00Z

Pensions are investment funds that are paid to the investor once they are retired. Pensions are the main source of income for retired people. While there are many other types of investments that may provide income for retirement, pensions are the most common.

There have been many cases where individuals were poorly advised to opt out of their state second pension (S2P) and pay money into other alternatives. The Financial Services Authority (FSA) estimates that on average those that contracted out in 1988, the first year it was possible to do so, are being paid pensions that are £4 a week less than if they had not opted out. Every employee builds up an entitlement to a second tier of state pension benefits, on top of their basic state pension, through the S2P and previously SERPS.

Roughly three million people have chosen to opt out of their S2P (formally called the SERPS, prior to 2002). in 2006 Norwich Union, the UK's biggest insurer, advised its pension savers to opt back into their S2Ps.

You are strongly advised to carefully consider all your options before opting out of your S2P. If you've got questions concerning your pension options, fill out a short form, and SimplyFinance will put you in touch with a pension advisor that will answer all your questions and then they'll search the market to find the best pension option for you. Why wait? The sooner you start saving, the better off you'll be once you're retired.

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Pension Basics

2007-08-04T23:00:00Z

There are many ways to save and to raise money for your retirement. One of the most common ways to do this is with a pension.

The easiest way to think about a pension is to think of it as money that will be available to you upon retirement. There are three typical ways a pension can be created:

State Pensions and benefits: this is money contributed by the governement that is paid to individuals upon retirement and/or reaching a certain age
Employer Pensions: this is money contributed by your employer that paid out to you by a current or previous employer upon reaching retirement age
Personal Pension: this is money that you have contributed yourself for your retirement

You are not guaranteed a State Pension. Many people incorrectly assume that they will receive a state pension when in fact they will not. In addition, the payments for a state pension are usually not large enough to live off of. The full basic State Pension for 2006/07 is £84.25 a week for a single person and £134.75 for a couple.

In addition, Employer Pensions are decreasing and fewer employers are providing adequate pensions to fully cover employees retirement.

With rising costs of living it is becoming more an more important for individuals to consider contributing personally towards your pension. The earlier you start contributing, the greater the benefits you will receive from long-term growth in your pension through investment gains.

It is strongly advised that you speak to an investment advisor to get quotes and information on different personal pension options to insure that you are properly covered for your retirement. Start saving early and save often!

To be connected with an investment advisor who can help you on your way to financial freedom, fill out our short form, and SimplyFinance will put you in touch with an advisor that will answer all your questions and who will search the market to find the best pension for you.

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The Importance of Personal Pensions

2007-08-05T23:00:00Z

It is a fact the State Pensions and Employer Pensions are not likely to provide enough money for an individual's retirement. It is imperative that individuals contribute regularly and often to their own Personal Pension funds. There are a variety of options for your personal pension, and there are many tax advantages for contributing to a personal pension.

A great tip for saving money is to "pay yourself first." This means that for every paycheck you receive you should be taking out some of that money before you pay any other bills or expenses and invest that money into a personal pension. A good rule of thumb is 10% of your income, but if you can afford to save more it is always good. One never knows what financial position one will be in 10 years from now and a little extra money in savings can go a long way towards securing a stable retirement.

Another good rule of thumb is to start early. There is a significant difference in the amount of money you will have at retirement if you start early. For example, if you invest £300 a month starting at 25, by the time you reach 65 years old you will have £1.7 million (assuming an average rate of return of 10%). If you started 10 years later at 35 you would only have £600,000. And if you started even later, at 45, you would only have £200,000.

Even if you are starting later, it is better to get started now than any later. You may have to work longer or pay more on a monthly basis to reach your goals, but whatever the time is and whatever your needs are, you need to make sure you are intelligently heading towards a successful retirement and a successful life.

It is strongly advised that you contact pension managers to find the right product for your future. Personal Pensions are a crucial strategy for a successful and fulfilling retirement.

If you'd like to speak with someone about investing in a personal pension, fill out our short form, and the specialists at SimplyFinance will put you in touch with a pension manager who will be able to advise you on the best pension option for you. Similarly, the pension manager will be able to search the pensions available to find the best pension to suit your financial goals and circumstances.

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