Personal pension plans invest the money you pay
A personal pension plan is a financial product that allows you to make regular savings for your retirement. Sold by insurance companies, banks, investment companies, and building societies, personal pension plans invest the money you pay in. If you want to invest your money in the business or give it to any company than take a look at this website Eden Investments.
You have to pay charges to the pension scheme provider, but on the other hand, you get tax relief on your contributions. This effectively means that the Inland Revenue tops up your contributions by the same amount that you pay as income tax. For example, for every $78 a basic rate taxpayer pays in, $22 is added by the Inland Revenue.
When you take out a personal pension, it is vital consider the level of fee that the pension provider levies. For many people, it is simply too complicated and obscure to find this out and this is why pension providers have for many years been able to get away with – in some cases – extraordinarily high chargers.
Research from the Consumers’ Association has shown that if you choose a personal pension that carries high charges, the pension you end up with could be half the amount you would have had with a better value plan. Apart from the cost of the product, you should also consider how flexible the plan is. Income for the self-employed is rarely without its peaks and troughs, and if you run into a longer-term lull in terms of work, you will appreciate the ability to halt your pension contributions for a while without being heavily penalized with extra charges.
Even if you are employed, this flexibility is very important in today’s employment climate where jobs are no longer for life. A flexible personal pension will also allow you to vary the level of contribution made. Anyone thinking about starting a personal pension must be clear that this is a very long-term investment, pensions advisers say. You should not put money into a pension unless you are sure you won’t need it. Once your money is invested in your personal pension, you cannot get at it until you are at least 50. Do not forget to visit this website Extra money info for useful information about investment.
Even traditional pension plans have a certain degree of flexibility. You can choose to take the pension at any age between 50 and 75, without necessarily retiring. A quarter of the sum that has built up can be taken as a tax-free lump sum, and it is up to you which type of annuity you buy. This might be one that rises each year or one where the monthly income remains static.You do not have to pay contributions monthly. They can be paid annually once you have worked out how much can really afford.
Banks and insurance or investment companies offer personal pension plans, and there are quite a few different types around.Unit-linked plans – this is the most common type. At retirement, the size of the fund your premiums have grown to is linked to the investment performance of a stock market fund.
With–profits plans– these are less risky than unit-linked plans. They are insurance policies where you also share in the profits of the insurer by means of bonuses. These bonuses cannot be taken away once added.
Unitized with-profits plan– a cross between unit-linked and with-profits.
Unit/investment trust plans – your contributions are invested in unit trusts or investment trusts ( two different types of investment fun), and the lump sum you end up with at retirement depends on the performance of the trust. These tend to have low charges and are often very flexible. Click here Help-Investor for detailed articles regarding loans, financing and investment.