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When our working life will eventually comes to an end we enter the stage of our life called retirement .It is this part of life which requires financing as we no longer earn and we live longer. Our income comes in the form of a pension.

The world of Pensions can easily get complicated, but the basics are not hard to grasp. But the 21st century does hold a few challenges for those in work and the need to plan for the future and hopefully a long retirement.


Nowadays fewer people at work are covered by good employer schemes. Local authority superannuation schemes are types which have felt the measures of cost cutting carried out by the government as they look for savings due to the credit crunch. The days of attractive company pension packages are disappearing , leaving the onus on the individual to have a plan in place .At the same time the culture of making the workforce and nation less reliant on state pensions is a buzz theme as the population grows and lives longer there just isn’t enough money to go around. It is this backdrop which means many people working today have no idea how poor they could be in retirement. For thousands in today’s workplace arrangements that have seemed secure and reliable for years can go suddenly wrong. Many companies and bodies have closed good schemes to new members, and some have suddenly faced the loss of their pension when their employer goes out of business due to the effects of the recession.

That means it's up to everyone at work to take control of their pension prospects, understand their own situation and make what changes they can to help ensure a reasonable retirement.

There are 3 types of pension

Pensions can come from three main sources:

  • the government –State retirement pension
  • your employer – Occupational pension
  • your own savings –Personal pension

Because pensions are complicated and there is so much ground to cover.

Here are some key issues regarding pensions:

State or Government Pension

The UK State Pension is made up of two parts a) the basic State Pension and the b) additional State Pension. Different people get different amounts of each. The amount of State Pension you get depends how many qualifying years of National Insurance you have built up. You build up qualifying years by paying National Insurance contributions, or you may get National Insurance credited to you by the government. In 2011-12, a single person can get up to £102.15 a week basic State Pension, though some people get less than this. Many people get more than this amount, because they also get an additional State Pension.

Once you get your State Pension, it gives you a regular income for the rest of your life. It can give you a reliable foundation for your income in retirement. These monies can be supplemented by other forms of pension, as below.

Company scheme

1/ If you are in a company scheme ask your employers to explain your benefits and which age are they calculated too. Is the scheme a finally salary scheme, career average earning scheme .These benefits are calculated on the member service.

2/Alternatively you may be part of defined contribution scheme. These can be group personal pension, money purchase or group stakeholder scheme. This work on the basis on how much has been invested and how well the investments work

Personal or Private Pension

Private pensions are essentially investment policies that provide an income in your retirement. Private pensions available to any UK tax payer under 75 years of age .The growth and attractiveness of private pensions has seen become available from insurance companies, high street banks, investment organisations and some retailers.

The private pension performs by policyholders contributing to their plan- the money is invested and a fund is built up. The amount of pension payable when the policyholder retires is dependent upon two basic factors. A/the amount of money paid into the scheme and b/ how well the fund has performed.

Further Information and advice

You should always take further advice before taking major decisions about your pension, and we provide a guide to further sources of pension’s advice and information.

Here are some useful organisations which can help with the understanding or planning your pension:

Independent Pension Advisory Service

Pensions Help line (General): 0845 601 2923

The Pension Service

Pension Service (General): 0845 6060265

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