Can you explain the basics of a pension?

Question

i am in a full time office job, but they dont offer a pension scheme.
what are my options as i want to get on one?? thisll be my first pension so step by step basics would be appreciated as to how it all works??????

I am in England, UK

..and i know what a pension is, i just want to know step by steps as to how i go about getting involved, what kind of company holds my money, whether i can monitor what money i have in the pension account (can i see online?) and how i retrieve the money when i retire?

Answer 1

you get old and quit and get paid by the government

Answer 2

Currently a good pension can leave you worse off. Returns from pension schemes are frequently very poor.

Even allowing for the tax relief the returns from investment trusts are often far more attractive.

The way it works is that the government spends millions on advertising pensions highlighting the tax relief etc.

The pension industry makes fortunes by making huge management charges for managing the pension funds.

The way the government funds borrowing is by issuing gilts, the main buyers of which are the pension funds.....

The customer gets right royally screwed again...

Look instead at regular saving schemes using investment trusts like Foreign and Colonial, one of the oldest.

Avoid independant financial advisors unless they charge a set fee for advice. Most will not mention investment trusts, which historically give much better returns than unit trusts, because they don't pay commission, and that is how most advisors make their money. What they will advise is whatever pays the highest commission, not what is right for their customer.

Reading the financial times for even a few weeks will open your eyes...

The beauty of investment trusts are that usually you can move your money around various funds run by the same company, Eg if you are young and can take risks some of the emerging markets funds frequently top a 60% annual return, but can be very volatile.

More fun than the 3% growth from a pension fund though...

Read through the F & C website, it's full of useful info. Look at the performance of investment trusts in the FT. Compare with returns from pension funds and you will see what I mean!!!!

You can split it so you invest some in blue chip (steady and Boring but should give safe growth) and some in the risky ones. Get it wrong you have time to recover, get it right and retire at 40!!

Answer 3

Basically a pension is a fund that you are paying into so you can retire with a comfortable annual income. There are lots of them out there so choosing the right one is important. You save a regular weekly or monthly amount and this is added to a fund, normally tax efficient. Have a look at www.HalifaxPensions.co.uk. But most financial institutions have them. These pensions are aimed at you retiring at age 50 or 55. Also look at www.uk.biz.yahoo.com/pension.

Answer 4

In UK they should have a pension scheme of some sort but the Company does not have to contribute. Be that as it may I would go and see couple of independent investment brokers and listen to what they have to say. It will cost more than you realise to get a decent pension so be prepared for an unpleasant surprise, but do your homework and remember to increase your contributions year in and year out to get to the target figure. Insurance companies are always pleased to give you a projection, but that is not a guarantee becaause the performance of the stock exchange as well as the Company will have an effect on your pension pot

Answer 5

If the firm has no pension scheme (or you're not eligible to join it) you can do your own by buying a contract from an insurance company. You pay in, your contributions are bumped up by tax relief and this is invested for you. When you come to retire, the accumulated fund is used to buy a pension, giving a monthly income for the rest of your life.

There are lots of variations. Depending on your income, you might be better off with some other type of arrangement. See a financial adviser.

Answer 6

If your employer has five or more employees all earnings above a certain minimum threshold (currently £4,524 a year), they must nominate something called a 'stakeholder' pension. They don't have to contribute to this on your behalf, but it may be a reasonable starting point for you to investigate.

The Pensions Advisory Service is a free, independent and impartial source of advice and help (NOT financial advice and they won't try to sell you anything), either by visiting their website, e-mailing or ringing them. Information at:

http://www.pensionsadvisoryservice.org.uk/

Answer 7

The best way to guarantee a retirement fund/pension is to get an IRA. They earn decent interest, are fully tax deductible and you don't have to rely on your employer or the government.

For those banking on Social Security to support them through old age, you will be badly disappointed. The largest Social Security that I know of that is going out right now (15 between my parents, aunts and uncles) is just over $1500.00 per month, which is to my father, who used to make 100,000's per year when he worked (he worked until he was 72). He has had to sell of all of his property except a 10 acre parcel, and build himself a 500sqft house on it to live in, plus renting out the remainder of the property.

Answer 8

its money 4 old age