Saving money for a Pension – Personal Pensions

Personal pensions or DC’s – defined contribution schemes could be the way for you. These particular forms of saving for your pension are helpful for people who have not been enrolled in pension scheme at work, are self employed or unemployed.

A basic personal loan works in the following way:

You make punctual deposits into your pension fund. This is you nest egg and you build it up while you are working for the day you retire.

The fund is then invested in things like stocks and shares and hopefully your nest egg will grow substantially by the time you retire.

Once you retire, you use your nest egg to buy annuity and voila, you have and income for the rest of your life.

In this case your pension will be determined by how much you  deposit and how your investments perform. Your investments could go south and you will end up with much less than you thought you would.

Pretty much anybody can take out a personal pension, even a child. It does not matter if you are employed, self employed or unemployed, as long as you are putting money away. You can take out a personal loan on top of a occupational loan (that you will get from your workplace) and that might be worth it to augment those payments. These rules apply to the Stakeholder pension as well.

A Stakeholder pension is quite enticing in that it looks just like a personal pension just with a lot of perks. You have the freedom to mover your money around and deposit as you will. The provider is barred from many of the charges that come with other pension plans. There is no minimum amount to be deposited, so you have the freedom to deposit what you like, and you don’t have pay every month if you don’t want to. You can also move your money around between different stakeholder funds with out penalty. This pension is for those who need a lot of flexibility.

Unlike the Personal Pension and the Stakeholder pension, SIPP’s or Self invested personal pensions allow you to manage, and choose your investments yourself. The provider also furnishes pension consultants and fund managers. They have a service where you can employ a manager to take decisions for you. SIPP’s is generally used by people who have large amounts of money to invest, as the fees and charges for their services are quite high.

These are just three options in a myriad of pension plans. Pension plans can also be a bit of an unsavoury neighborhood. Anywhere where unsuspecting people with a lump of saved up money hang out, there are going to be sharks circling, so it is absolutely key that you find qualified advice from a reputable institution before making any hasty decision. You don’t want a fox to sneak up and steal that egg.