There has been a lot of news in the UK press this last week about the retirement age for state pension rising and this got me thinking about pensions and saving for our future.
Pensions and all the jargon about them really confuse me, so I have decided to try and explain some of the Pension jargon.
- Superannuation - Superannuation is essentially what employers pay employees into their retirement funds
- State Pension - The pension that you will revive from the government when you reach their appointed retirement age.
- Private Pension - These fall in to three main catagories.
- This is where you and/or your employer make regular monthly payments
- . These are similar to standard pensions, but have low and flexible minimum contributions, capped charges and a default investment choice so you don't have to make the decision where to put your cash.
- These work in the same way but are DIY pensions, allowing you to choose your investment. Investors
- Annuity: The usual means by which a pension fund is converted into an annual fixed income for life. This is paid regardless of how long the recipient lives, You can have joint or single annuities.
- Additional voluntary contributions (AVCs): pension top-ups to a company or occupational scheme, which individual savers choose to make in addition to whatever the scheme requires.
- Free-standing AVCs (FSAVCs): pension top-ups to a personal plan which is unconnected to any company or occupational scheme.
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