Can someone explain pensions to me please?
I’m 22, and for the first time in my life have found myself with a regular monthly income and am thinking I should probably start putting something away for the future.
My employer doesn’t offer a pension scheme and I probably won’t be staying with them for more than a couple of years anyway. So I guess that means I go with a personal pension plan? I’ve looked into them but they’re a bit confusing and seem to rely on me knowing what age I’ll retire, and predicting my income, and focusing on government regulations that clearly will have changed my the time I’m a pensioner… somewhat daft really.
So is there a specific type of pension scheme I should be looking at, or am I better off just sticking £100 a month in a decent savings account until I have a clearer idea about my retirement?
There are companies who manage pensions for people. You pay in a regular amount and they will invest it for you in what they consider are the best places. As you are only 22 all of your pension contributions can go into medium (or high) risk investments but you needn’t worry about this as the pension management company will do all that for you. Then, when you reach retirement age the company will do everything required to turn the money you’ve saved, plus the money that has come from the investments over the years into a regular pension payment for you.
This is a big subject and it’s not possible to explain it all in a Yahoo answer. I use Fidelity to manage my pension (through my employer). They receive my monthly payment and invest it for me. I can change where it is invested if I wish or I can just leave it up to them to manage it without any intervention from me at all.
Here are some sites you may find helpful. The first is a general information site about pensions. The 2nd is about government pensions (only valid if you’re in the UK). The 3rd is the Fidelity site I mentioned. (There are alternatives to Fidelity. I mention this one as I am familiar with it.)
http://www.direct.gov.uk/en/MoneyTaxAndBenefits/PensionsAndRetirement/BeginnersGuideToPensions/DG_10026905
http://www.thepensionservice.gov.uk/
https://www.fidelitypensions.co.uk/index.html
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