Private pension explained

When saving for your retirement, starting your private pension is the best option.

13:29 20 January 2013

You have three options when saving for your retirement. These are private or personal pension, company or occupational pension, and stakeholder pension. Each one has it’s own advantages and disadvantages. The one thing that they share in common though is that the money you put in is not taxed.

When all things are considered, private pension emerged as the best option for those who are saving for their retirement. With this, you pay regular monthly amount to a pension provider who will invest your money and build your pension fund in your behalf.

Compared to company pension, personal pension is available to everyone. As long as you can make monthly payments, you’re good to go. In addition, private pension do not usually has restrictions on who can pay money into the pension. This means that your relatives or loved ones are allowed to help you build your retirement fund.

The pension provider will provide you with yearly forecasts on how much you have in your fund. You’ll also receive predictions as to how much your pension income will be in the next years to come should you continue to pay the same amount for specific number of years.

The final value of your pension fund will depend on two major elements: how much you put in and how well the fund’s investment has performed. Keep in mind that you’ll be charged administration fees and this will be directly taken from your pension fund.