The different types of personal pensions and what to consider when deciding if a scheme is suitable for you.
Personal pensions are pensions that you normally arrange yourself rather than through your employer.
They are almost always defined contribution schemes and as such work in much the same way as the defined contribution schemes offered by employers.
Pension freedoms, what does it all mean:
The 6 April 2015 saw the highly anticipated pension reforms announced in March 2014 quietly redefine the traditional retirement landscape. Known as the new ‘pension freedoms’ these changes will give individuals a much wider range of options on how to access their pension pots when they retire.
Whether you want to guarantee that you will receive a regular income throughout your twilight years or you want to take your money and turn it into some kind of productive assets, these reforms will let you make it easier for your money to do what you want it to.
So, what do these new freedoms mean in practice?
A YouGov survey, published a week after the reforms came into effect, found that:
- 30% of people surveyed said they planned to exhaust all their savings within a decade
- 16% would spend some of their funds on a holiday
- 10% planned to buy a car
- 23% would make new investments such as ISAs
- 11% would pay off their mortgage
- 8% would clear other debts.
- 15% said they would help their children.
Just 12% planned to withdraw all their funds within a year, with 6% intending to take out more than £20,000.