Pensions Explained.
A pension provides income to live on in retirement. There
are state benefit schemes offering limited financial support
for your old age, and a number of other private schemes
enabling you to build a larger fund for the future. To avoid
a paltry income in retirement it is in everybody’s best
interest to save more for it.
State benefits are included in the State 2nd Pension,
replacing the basic state pension (SERPS) from 2002.
There are a number of other types of pension scheme including
occupational pensions,
personal
pensions and
stakeholder pensions.
Where the pension is an occupational scheme. it may be possible to make additional contributions in the
form of
AVCs,
FSAVCs or
stakeholder pension contributions.
Self invested personal pension schemes (SIPPs) allow
investments from a wide range of sources including
Commercial Property, shares and unit trusts.
Types of UK Pensions.
Brief explanations of the different types of UK pensions are
given below, please follow the links for more information.
Basic state pension.
Although an entitlement for most people, the amount received from the basic state pension will depend on the amount of national insurance contributions paid.
more >>
State Second Pension.
On 6 April 2002, the State Second Pension (S2P), introduced by the Child Support, Pensions and Social Security Act 2000 replaced the State Earnings Related Pension Scheme (SERPS).
more >>
Personal and Stakeholder pensions.
Personal pensions, introduced on 1 July 1988, originally aimed to give people who were not part of a company pension scheme their own portable pension, designed on a money purchase basis although since April 2001 certain individuals who are members of company pension schemes can also take out personal pensions.
more >>
Occupational pension schemes.
Employers can set up occupational pension schemes for their employees.Public sector schemes typically offer pension accrual of 1/80th of final remuneration for each year of service up to a maximum of 40 years plus a tax free lump sum of up to 1.5 x final remuneration.
Private sector schemes can be either final salary schemes known as defined benefit schemes or money purchase schemes known as defined contribution schemes.
more >>
Additional Voluntary Contributions
(AVCs).
It is now compulsory for companies to offer employees the
opportunity to invest additional contributions into their
occupational scheme where there is one, in order to boost
retirement benefits. more
>>
Free Standing Additional Voluntary Contributions
(FSAVCs).
Free standing additional voluntary contribution schemes (FSAVCs)
were introduced in 1987.
more >>
Self Invested Personal Pension Schemes (SIPPS).
From April 6th 2006 Government proposals for pension
simplification came into effect. This has lead to many new
opportunities for people to invest their savings for the long
term with greater flexibility when it comes to retirement and
ways of generating an income. more >>
State Earnings Related Pension Scheme (SERPS).
The State Second Pension (S2P) replaced SERPS with effect from 6 April
2002. more >>
