Pension is a saving method through which a person put asides some money during the working life to fund retirement. There are three main types of pensions including state pensions, personal pensions and company pensions. Total value of pension will be based on number of factors including total contribution, time period during which contributions were made and the total contribution of employer. At the time of retirement, a proportion of overall pension fund is utilized to purchase an annuity to get a regular source of income for the remaining life. Pension is an important part of retired life and in order to deal with changing circumstance, it is essential for an employee to compare the benefits and restrictions of different types of pension at various times during working life.
Tips for Pension Comparison
If you want to spend happy and comfortable life after retirement then you have to compare your pension plans to get maximum benefits out of it. Following are some tips for pension comparison:
- In first step, you have to consider the type of pension such as for the person pension you have to compare different pension providers and their packages. You can take personal advice for the investment of pension funds and can get maximum value out of it. If you are a job holder and want to switch your job then you have to compare pension plans and benefits of both organizations before quitting your old job.
- Do not forget to consider tax relief available on your contributions, eligibility of pension and benefits of employer’s schemes as well as partners. You have to check death-in-service benefits for the better future of your family. Transfer of pension between schemes and employers is another factor so does not forget to consider it to have maximum benefits.
- You can find benefits that you can receive from your state such as in UK the every person is eligible for the pension at the pension age. UK state pension supports low level of income that is ideally supplemented by employer pension scheme or personal pension.
- Employer pension scheme can be much better to have because these are run by both private and public sector employers. These are considered as tax-efficient contributions so these can be more beneficial as compare to personal pension plans.
- Usually different types of schemes are available including money purchase scheme that is based on defined contribution based on performance of invested pension funds. Another scheme is earning related scheme that is defined by final salaries and number of years the person has been contributing.
- If your employer is not offering a pension scheme then you can consider personal pension schemes. Some financial institutions such as banks, insurance companies and building societies are offering different personal pension plans. You can get the advice of independent financial advisor before taking any pension scheme for your better retired life.
- Personal pensions will help you to increase your savings as much as you can through money lump-sum with some tax relief. Stakeholder pension is a famous type of personal pension that offers some specific benefits in terms of security, value of money and flexibility.