17 October 2022

We all have a desire to plan for our future but the world of pensions can seem daunting and confusing. However, when you scratch beneath the surface and understand the different types of pension that are available, you soon realise that things are not as complicated as they might seem. Therefore, it can help to understand the different types of pension and what they offer.

State Pension

This pension is claimed by most people once they reach retirement age if they have been contributing towards National Insurance for more than a decade. The State Pension age is always being reviewed by the government as it currently stands, people can claim once they reach 66.

How much you receive will depend on how many years you have been paying national insurance. If you have been paying for 35 years, then you will be able to claim a full state pension and if you have been paying for less, then you will get the basic state pension that is adjusted based on the number of years you have been paying.

Workplace Pension

There are two categories that fall under workplace pensions:

Defined Contribution – This is the most common type and the final amount you receive will depend on how much you have paid into it, how it was invested and how the investments have moved throughout the period that your money was invested.

Defined Benefit – This will pay you an income based on the salary that you were paid and how you were employed. These types of pensions can be extremely good depending on your circumstances and the scheme. These are often found in the public sector and some large corporations but they can prove expensive for companies.

You might also have heard of auto-enrolment which is a government initiative that was started in 2012. The aim was to get more people thinking about their future and so, for those over the age of 22 and earning more than £10,000 they would be automatically paying a percentage of their earnings into a workplace pension.

Personal or Private pension

If you are self-employed or want to open your own pension then a personal or private pension is the next option. This is one that is opened by yourself through fund providers who will then invest your money on your behalf. You will have more control over your investments and the potential to earn will depend on how much risk you want to take. The more risk you take, the higher the returns but you could lose your investment and the lower the risk, the lower the returns. Furthermore, you might also be asked if you have any preferences when it comes to investing. Once you have chosen, you will then pay a set amount into your fund and over time, the fund will grow depending on the way in which it is managed.

So, pensions are hugely important when it comes to planning for the future and that is why it is vital that you understand the different types.

How We Can Help

As an award-winning pensions and benefits consultant, we help SMEs to create a more secure, satisfying and successful present and future for your business and for your employees.

As an independent consultancy we get to work with all the major providers of pensions and employee benefits. We know their products and get great deals, which in turn means you get the right advice and can usually save you money. We’ll meet you in person to understand your company, culture and what you want to achieve. From this information, we will do all the spade work and come back with the right products and services that deliver your promise to your employees.

We offer a no-obligation call with a member of our friendly, experienced and supportive team. We are here to make your life easier by providing the best possible service – pure and simple. Visit our website www.corinthianbenefits.co.uk/ or drop us an email at [email protected] so we can discuss how we can support you and your employees.