Retirement planning is a multistep process that requires time and commitment to evolve. In fact, it starts with thinking about your retirement goals, life ambitions, and financial situation. Even though these factors could change over the years, they have to be considered when choosing the pension plan, because everyone has different characteristics which may or not suit your situation. As a matter of fact, today, if you live in the United Kingdom, you have a wide choice when it comes to choosing the retirement plan which best suits your needs. Anyway, there are some features which apply to all pension funds. For instance, whichever pension plan you’ll decide to open, you’ll be able to count on the support of the Government, which will contribute through tax relief. Since a pension trust is a long-term investment intended to provide you with an income to which you’ll be able to live on once you reach the pensionable age, retirement planning becomes crucial. Thus, by evaluating you expenses, needs, goals and you overall personal and financial situation, you may be able to forecast how much you should be saving for retirement. To do this you can also rely on online tools, such as a pension saving calculator.
How do pension trusts work in the United Kingdom?
As mentioned above, today you can choose between a great diversity of pension plans, each of which has been intended to meet the needs of many professional categories. However, there are some important rules that apply to any plan available. For instance, the Government will always contribute to your future through tax relief. Moreover, a date has been set for you to be able to access your savings. As a matter of fact, in the United Kingdom, the pensionable age has been set at 55 years old: before then you won’t be able to withdraw any money from your fund. Although it might seem a strict rule, it has been created to help you collect a significant amount able to sustain you in your life after work, and also to eliminate the temptation to withdraw before the time. Another important thing you should always keep in mind is that when opening a pension scheme, the money in your fund will always be invested. This rule has been designed to give your capital the opportunity to grow over time. However, this is also very risky, for the market volatility makes the outcome of every investment unpredictable and unsafe. This means that the amount you get when you turn 55 will also depend on how well or bad the investments performed.
How many pension trusts are there?
If you live in the United Kingdom, you can choose between three different types of pensions. The first one is the workplace pension, a scheme designed for employees and to which your employer will always contribute. If you’re an independent worker you can opt for the personal pension, which give you more freedom on matters such as the amount of money to put in your fund and how often to deposit. Lastly, there’s the state pension, which will give you access to a pre-established amount of money as soon as you reach the retirement age, which for this scheme has been set at 66. The amount you get will be based on your National Insurance record.