Get to Know About Different UK Pension Schemes!

Get to Know About Different UK Pension Schemes!

There are many types of pension schemes available in the UK today. It is important to understand the value and worth of your pensions.

Having a good pension pot scheme will help give you the standard of living you want for retirement. ‘Pension pot’ refers to a type of pension you build up with pension contributions you and/or your employer make. Many employers encourage their employees with all kinds of UK pension schemes to get them off to a good start. There is the option to opt out but it’s generally a good idea to contribute towards your pot sooner rather than later.

So, in order to understand what the pension schemes are all about, or how to segregate them, let us look at some of the schemes and their features.

  • Workplace Pensions – This is a pension provided by the employers and the scheme.   Depending on the scheme you’re in, the employer and employee will both make contributions to the pension fund and the amount can be withdrawn by the employee as a pension at retirement.
  • Personal/Stakeholder Pensions –The pension is generally independent of your employer, and you pay the whole contribution into the pension scheme you have chosen. You have the choice of selecting the provider and making regular contributions to be withdrawn at a later date at retirement.
  • Drawdown pensions –   This is a flexible method that allows you to withdraw benefits from a UK Registered Pension Scheme. Your pension savings will be invested and are available to withdraw at retirement. The income you get will vary depending on how the fund or the type of investment has performed. This should be done with the help of a qualified financial adviser
  • SIPP – This pension is known as a Self-invested personal pension. A tax wrapper that holds and controls investments. An individual can deposit their UK pension regularly in this scheme to be withdrawn later at retirement.

There are several pension schemes out there which can be beneficial depending on your requirements. Get the best advice possible to ensure you make the right decision to enjoy your retirement.