People Have More Options Than Standard Pensions; What Are They?
We all dream about our retirement, we hail it as the time we can do as we please when we please. To be able to enjoy it to the fullest, however, we need to make sure that we have the finances to back up the lifestyle that we desire. This is why many people are turning to non-standard pension, those that are self-employed, for instance, or those whose employers offer nothing in way of a contribution towards the pension of their employees might be better off looking elsewhere.
Here we run through some of the best types of non-standard pension schemes
State Pension
According to Gov.UK so long as you have enough national insurance credits on your record you can claim state pension regardless of any other pension schemes that you have paid into.
Many overlook this, assuming that they won’t be able to claim the standard weekly amount if they have options elsewhere.
The state pension, however, can be an easy way to top up your earnings during retirement.
Lifetime ISA
Lifetime ISAs are designed to help people save to fund their own retirement. According to Which they work best for those who are self-employed or whose employer offers no pension contributions of their own just because it often makes more sense to take advantage of pension contributions from another source if you can.
They also make sense for those who would look to access their money earlier than 60, when most pensions allow people to access their money.
Lifetime ISAs can be opened between the ages of 18 and 40 and you can pay in up to £4000 a year up until the age of 50.
Paying in the maximum amount will earn you a 25% bonus from the Government, although this will be rescinded if you choose to withdraw your money before your 60th birthday.
It is also worth noting that you can run a lifetime ISA concurrently with any employment-based pensions scheme, so, if you have the money to save now, this could be an extremely useful tool to boost your retirement earnings.
Private Pension
Another option for the self-employed or who wish to overlook the pensions scheme from their employer is an SIPP pension.
The Self-Invested Pension Plan offers an opportunity for you to really take control of your own financial planning. Whilst standard pension plans offer you little choice as to how your hard-earned money will be invested, a SIPP allows you to make these decisions for yourself.
It is risky in that should you make a wrong investment decision you only have yourself to blame but the rewards can be immense if you make the right ones.
Moneysavingexpert.com recommends that those new to investment opt for a full SIPP as opposed to a low cost option. This is because with the full SIPP you have access to a wider range of investments as well as advisors to help you make the right choices.
It is possible as well to take advantage of tax relief on any contributions you make to the scheme, currently, the government allows you to pay in £40000 a year before tax.
Category: Retirement
