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How do I get a Pension?

This is not a question enough young people are asking. A lack of awareness is a major contributing factor to the fact that so many people are ill-equipped for their retirement. People are typically ignoring or failing to realise the importance of making sure they have a pension plan in place from a young age, and as such are set to struggle when they reach retirement age.

How you get a pension really depends on which type of plan you are looking to start.

State Pension

Everyone who works in the UK and pays National Insurance will be entitled to a State Pension. To get the full benefits you must have paid at least 30 years worth of National Contributions. You do not have to ‘open’ a State Pension, HMRC will use your National Insurance Number to calculate your contributions and your entitlement. You will then start to receive benefits when you reach retirement age.

Company/Occupational Pension

With occupational pension schemes you are traditionally required to opt in to the scheme. Your employer would give you all of the relevant information and would usually set up a meeting between you and their chosen intermediary firm of financial advisors.

However we are now going through a transition period, where the Governments auto-enrolment scheme is being rolled out to firms across the UK. The idea behind the scheme is that all employees are automatically enrolled on to the company pension scheme in order to encourage saving for retirement. If you don’t want to be enrolled, then you have to opt out. Your employer will be able to give you all of the information you need

Stakeholder Pension

You can invest in a stakeholder pension scheme yourself, at any time. There are a number of companies who will provide you with the means to open a stakeholder pension scheme with them, and some will help you to choose your funds, minimising risk if you are not an experienced investor.

However it is worth noting that these are not straightforward products, and if you have any doubts about starting a scheme you should speak to a financial advisor. Our team of pension advisors would be happy to help.

Self-Invested Pension Plan (SIPP)

SIPP’s, like stakeholder pensions, can be accessed and opened by you when you want. A SIPP will generally give you more investment choice than other types of pension plan, and possibly the chance to receive higher returns. However with this comes an increased risk.

With a SIPP you effectively become your own fund manager, and making sure the performance of your fund is maximised will require you to pay close and regular attention to your investments. This means that you must choose the right investments and monitor them accordingly. Failing to do this, or doing this incorrectly, could seriously hamper your funds value, so seeking financial advice is important if you become stuck.

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