Everybody reading this will be at a different point in their life, but every one of you should be thinking about your pension. Whatever your age, you are never too old or too young to be planning for the future. The average age of a UK resident is 38.6 years old; if you’re a man that means you can expect, on average, another 38 years on this planet, and if you’re woman, it’s another 42 years.
Those figures are based on the 2001 census and it is expected that the average life expectancy will continue to go up and up. If the population lives longer, that naturally means it will get bigger and the UK government have repeatedly voiced concerns that there won’t be enough money in the state pension pot to give everybody enough to live on. That news alone should spark you into action.
So how do you go about finding the best pension schemes? Do you choose a personal pension scheme or a stakeholder pension scheme? How much should you invest and how much will you get back? These are all questions you will be asking yourself as you prepare to make such an important decision. Get the decision right and you can enjoy the retirement you’ve always dreamed of. Get it wrong, or ignore pensions altogether and it could be beans on toast every night for eternity.
The difference between personal pensions and stakeholder pensions is relatively straightforward. Personal pensions are typically run by pension companies and offer the potential of higher return than a stakeholder pension but with slightly higher risk. Stakeholder pensions are regulated by a strict set of government guidelines and are normally run by banks.
Although it is different from person to person, the best general pension schemes on the market at the moment belong to Standard Life, LV= and Legal & General who between them offer a dizzying 335 funds available for investment. Minimum monthly investment starts at £100 although the minimum annual investment can stretch to up to £3,000. For those on a variable budget, there is the NFU Mutual pension which doesn’t have a minimum investment limit.
So how much can you expect to receive? Well this varies massively dependent on how much you can afford to invest, how often and for how long. It also depends on your age and the product that you choose. It is important to have a good relationship with the pension provider you do choose so that if your circumstances change or if you are worried about your pension’s performance, you have piece of mind.