Concerned About Your Pension? Here are Some Alternatives

One of the benefits in regard to living in the United Kingdom is that you will able to access a state-funded pension once you reach the age of retirement. However, there can be many times when these funds are not able to sufficiently cover your expenditures. In fact, recent studies have shown that as many as four in ten millennials do not possess any current pension provisions. The key takeaway point here is that there are many alternative options to a state pension. Let’s take a look at a handful of considerations to keep in mind, as they could very well be able to provide you with the necessary liquidity in the future.

SAYE Schemes

It can be argued that this is the most popular option, as the savings are predictable over time. Also known as pay-as-you-earn plans, these packages will allow employees to put away a percentage of their monthly wages. This amount is flexible and it usually equates to between £5 pounds and £250 pounds every month. Not only will the money accrue over time, but there are often tax-free bonuses to be enjoyed if the scheme is completed. SAYE plans can be chosen based off of the amount of time that monthly withdrawals will need to be made. This time period can last between three and seven years (based upon what the employer is offering).

ISA Holdings

Most of us are already familiar with an individual savings account. ISAs have become increasingly well-known ways to put money away towards retirement. These are another excellent method due to the fact that you will not be obliged to pay any taxes on the savings themselves. You will only be taxed once this income is liquidated upon your retirement. There are also instances when you can become involved in what is known as a stocks and shares ISA. In this case, your money will be invested across a variety of financial sectors. The theory is that any funds will grow concurrently with the holdings.

Private Investment Pensions

Another interesting alternative is to become involved in a private pension plan. Many experts feel that privately managed pensions are more productive due to the observation that the fund managers themselves are much more motivated to secure amenable returns for the investor. The ageing population across the United Kingdom can also be addressed by these programmes. The number of citizens over the age of 65 is set to dramatically increase in the not-so-distant future. This will dramatically change the current dependency ratio. There are fears that the government may have difficulty securing the required funds to support pensioners in the future; leading to potential “black holes” in regard to post-retirement liquidity. Focusing upon private investment pensions could therefore be a wise decision to carefully consider.

These are three common alternatives to state-funded pension schemes. Planning ahead and appreciating the merits of each one will allow you to make the most informed decision when the time is right.