All of us are looking forward to retirement. Whether this window is 20 years away or just around the corner, the ability to procure a lucrative and client-centred pension plan is essential. Pensions enable us to enjoy extra liquidity when we have stopped working and they provide our families with financial breathing room in the unfortunate event that we fall ill or pass away. How do pensions function? What are their main benefits? Which companies are the top providers and what do we need to consider when choosing the appropriate plan?
Pensions Explained
We can think of a pension as another form of insurance. We will pay into a pension fund throughout our working life. These payments are normally deducted from our salary. Upon retirement, this money becomes available and in the majority of cases, it is a tax-free source of additional income. However, there may be times when we are able to tap into these funds earlier if the need arises. Pensions are also another form of equity; a useful option to possess when purchasing a second home, when applying for a second mortgage or when requesting a personal loan.
Additional Benefits
Pensions tend to be quite flexible in regards to catering to the needs of the customer. For example, some will literally “lock” the money away until the age of retirement has been reached. Others may be able to provide you with sustainable wealth and capital growth through investments. In this case, a portion of the allocated funds will be placed into long-term, medium-yield assets such as funds and blue-chip stocks. Assuming that the assets gain value over time, the size of the pension itself will grow. As mentioned in the last paragraph, most pensions within the United Kingdom are not subject to capital gains tax. This has massive benefits in the log run, as more money will accrue.
The Top UK Providers
It is always a good idea to choose the top providers, as they can offer the greatest number of choices in today's marketplace. A handful of the best of the business include:
- True Potential Investor
- Hargreaves Landsdown
- Aegon
- AJ Bell
- Alliance Trust Savings
- Aviva
Now that we have listed reputable firms, how can you get the best deal? It is very important that you establish a rapport with your representative fro the very beginning so that he or she appreciates your needs. Also, compare and contrast at least three providers before deciding upon the final option. Lastly, take a look at all of the fine print to be sure that you will not be subject to any hidden fees or charges during the lifetime of the pension. BY following these suggestions, finding the right plan at the right price has never been easier.
