It is a fact that until recently, the majority of people who work in the private sector have no corporate pensions, such schemes may only be prevalent in larger corporations. However, this is no longer the case, every company must offer employees access to a pension scheme. It is essential that retirement planning advice is sought well before retirement so that there is proper provision for a reasonable standard of living after you stop working.
Personal pension plans offer a number of definite advantages over corporate or government schemes that have a definite laid down procedure for the saving of money and its investment. A properly planned pension can offer as much financial security as any of the other more common methods of saving for retirement and creating a proper corpus, while still getting all the advantages for tax write-offs that the authorities allow. Some employers offer such contributions as part of the perks and these amounts are often large enough to ensure financial security. An alternative is to have retirement plans that the employee has to contribute to, take tax write-offs and create the required amounts that can be used after retirement.
What is the amount of money that a person will receive from these pension plans? It can depend on the final salary prior to retirement and will also depend on the number of years of service that the employee has had in that organization. A good pension plan is one in which you start investing as soon as you start earning, as this imposes a financial discipline that can be of great help in managing finances. An early start also ensures that you can create the needed corpus with much lower contributions. Delaying the start of a personal pension plan to middle age or later in life, often means that you have to put in larger amounts, at a time, when your commitment to mortgages, children's education, and other demands are also increasing.
Personal pension plans can make for investment in annuities, insurance, and other allowable investment opportunities. Annuities bring in dividends or interest that steadily helps to build up the funds that will be available after retirement. On reaching retirement age, a person can have various alternatives to access the pension plan funds. Some plans will allow you to take a lump sum and a fixed pension for as long as you are alive. The available funds can be disbursed to the person nominated, after your death. So, in this way, a personal pension plan also looks after your loved ones after your death.
Some personal pension plans can be of the type that allows you to make the decisions as to how the funds are to be invested. This plan gives you complete control over your retirement corpus. If you do not want this responsibility look for pension funds that have had a good track record and offer plans that are suitable for your lifestyle. Every plan will have its own terms and conditions and charge various fees that must be justifiable. Start early, select the right pension plan, and look forward to a life after retirement that is without any financial worries.
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