Pensions, Healthcare Cover and Life Insurance
Page 2 of 5
Large public companies still operate attractive occupational pension schemes called 'final salary' schemes, where benefits at retirement are based on your years in the scheme and your final earnings. This is generally recognised as the best type of scheme for employees but the government has introduced substantial amounts of legislation, restrictions and rules in recent times which is scaring off many of the larger employers. They now regularly give consideration to changing their arrangements to 'money purchase' where your benefits at retirement are based on premiums invested and investment growth achieved.
If your company offers an occupational pension scheme then, generally speaking, you will be well advised to join it. They may however offer a group personal pension, which is 'money purchase' but is governed by different legislation to occupational schemes. Personal pensions are very simple and are favoured by smaller employers.
If your employer does not offer any kind of pension arrangement, then you will need to set up your own personal pension but you may be able to persuade your employer to contribute to it.
Matters are complicated by the introduction of Stakeholder pensions and your employer will need to introduce a Stakeholder scheme unless he has good arrangements already in place. Stakeholder pensions are almost identical to personal pensions but the government have insisted that charges under a Stakeholder pension will be limited to 1% per annum, which is less than is generally associated with a personal pension. However, the cheapest scheme is not always the best scheme especially as investment performance is paramount. Also, you are unlikely to find an independent financial advisor who will provide advice on a Stakeholder pension without charging a fee. This is because there is no room within Stakeholder charges for the cost of advice.
If you refer to our website www.pensionspartnership.co.uk, you will find a section on how to obtain advice sheets on these subjects.
