In very simple terms, a pension scheme is a type of savings plan, which helps you save money for later in life. It is given a favourable tax treatment in comparison to other types of savings plans.
The current state pension age is 65 for men and 60 for women, although the current state policy is to make the UK state pension 65 for everyone by the end of November 2018, and 66 by October 2020. The current law provides for further increases to age 67 by April 2028, and an increase to age 68 no later than 2046. In addition, because pension policy changes so frequently it is pivotal you gain legal advice in order to assess the many different pension plans you may be entitled to.
Funding for Pensions:
Pensions can be funded through three different ways:
- State pensions
- Trust-based company pension plans
- Contract-based personal pensions
Each type of pension plan is governed by complex legislation which covers:
- Investment rules
- Splitting pensions in wake of divorce
- Disclosure of pension information
- Procedures on transferability
- Early leaver benefits
The current rate for pension is £116 per week for a single person, and £185 for a married couple.
Pensions Divisions and Subdivisions:
UK pensions fall into three divisions and seven sub-divisions:
A. State Pensions
- Basic State Pension:
- £116 per week, and an additional £69 for a married couple.
- State Second Pension (S2P):
- Extra amount dependent upon years paying National Insurance.
B. Occupational Pensions
- Defined Benefit Pension:
- Employer/spouse agreed monthly amount.
- Defined Contribution Pension:
- Paid monthly through your contributions to a company pension plan.
C. Individual/Personal Pensions
- Group Personal Pensions:
- Individual pensions plan which your employer chooses, but it is an individual contract between you and the provider.
- Self-Invested Personal Pension:
- Allows individuals to make investment choices, must be approved by HMRC.
- Stakeholder Pensions:
- Used primarily for people not employed by a company, use income to buy a pension plan.
In order to ensure that your pensions are protected and abide by stringent government regulations, please do not hesitate to contact Linkilaw. We can put you in contact with lawyers who are experts in protecting clients’ pensions and have done so for decades.