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What Type of Pension Do I Have?
A Guide to Understanding Different UK Pension Types
Understanding what type of pension you have can often be very confusing as there are so many different types of pensions in the UK that offer many different things. Often the main reason people transfer to new up to date arrangements is the lack of restrictions. Below we will explain all the different types of pensions in the UK.
What you need to know about Final Salary Pensions
Many final salary pensions schemes have been closed to new members or even all members over recent years due to huge deficits that are causing financial issues and even bankruptcies for large firms. Final Salary Schemes offer a guaranteed income for life, based on a proportion of your final salary for the period worked, although other considerations are taken into account.
What you need to know about SSAS Pension
These were designed by small companies as a way of having a company pension scheme. One of the advantages of SASS is that the pension can be used to help the business get loans or buy a commercial property which the company could then leaseback. They also allow directors to contribute 70% of their salary towards the pension each year. Each member is usually the trustee of the pension plan.
What you need to know about Defined Contribution Pensions
Defined contribution pensions can have many different names, types, investment options, retirement options, exit penalties and guarantees. Schemes can often be complex, with very little help from the scheme itself to help the member understand what options they have.
What you need to know about Ethical Pensions
The objective of an ethical pension fund is to deliver positive returns while prioritising environmental, social and governance considerations. It will only invest in companies that meet a strict set of criteria, avoiding those whose products or business practices fail to meet the required standards, such as arms dealing, tobacco, disregard for human rights, and companies that harm the environment.
What you need to know about With-Profits Pensions
These are a type of pension where contributions are invested in a with-profits fund. Each year, bonuses will be added to the investment, which is guaranteed, but these levels have been trickling down since their popularity back in the 90s
Annuities
An annuity provides you with a guaranteed income for the rest of your life. You hand over your pension as a lump sum to an insurance company, and they calculate your annuity based on age, gender, the size of your pension, where you live, and the state of your health and then provide you with an income for life accordingly.
What you need to know about Unit-Linked Pensions
The majority of Defined Contribution pensions will be unit-linked. This means the value of your pension will fluctuate with the value of the funds you are invested in. The question you should ask yourself is, What are you invested in?
What you need to know about a Section 32 Buyout Policy
These types of pensions have largely been left behind after personal pensions were introduced in 2006, yet there are a handful of people who still have these schemes. In short, this scheme is a contract between a member and a pension provider which was set up when they transferred an old pension into this scheme. They were developed to help people transfer built-up pensions into a new vehicle rather than leaving them frozen when they terminated employment.
What you need to know about Personal Pensions
A personal pension is a type of defined contribution pension. You choose the provider and make arrangements for your contributions to be paid. If you haven’t got a workplace pension, getting a personal pension could be a good way of saving for retirement.
What you need to know about the types of Investments inside Pensions
Until relatively recently, pension funds invested primarily in stocks and bonds. Today, they frequently invest in a variety of funds, including private equity, real estate, infrastructure, and so on. We will look at the different investment types you may have in a pension.