Personal pension planning

1354359_fifty_pounds_2While it’s important for every UK citizen to protect their right to the state pension, we are all aware that despite significant recent increases, it is still not very much, which is why it’s called a basic pension.  So to be able to have a reasonable income on retirement, we need to explore ways of boosting it.  Realistically, this may be hard for many of us who face financial challenges anyway, but we need to recognise that our daily living expenses may well increase on returning to the UK, and our support giving may drop once we are no longer serving abroad.

If you are deemed as employed by a sending agency, they should already have made you aware of their pension arrangements.  Any UK organisation which employs more than 5 people is required to provide a pension plan.  You don’t have to take this up, but if you don’t, you could also be missing out on the money that your employer will put into YOUR pot.  It may not be much, but you’re entitled to it.  Ask your finance manager for information.

Another alternative is to investigate paying into your own pension plan.  You don’t need to be employed to have one of these, and they have an advantage that for every £1 you pay in, the government will contribute a further 25p.  Yes!  Money for nothing from the government!  This is because pensions are regarded as tax-deductible, and you may be eligible for the government’s contribution even if you don’t pay tax!  This makes a pension one of the most effective ways of saving money, as long as you are prepared to lock it away till you retire.  If you live abroad there may be further complications though – some pension plans retire you to return regularly to the UK and remain here for a period of not less than six months.

All this may be a bit confusing and you may want to know where to go for help.  Any UK bank or building society will be able to provide products for you from their own (limited) range of pension products, and some other companies are well known.  The best way to seek advice is to find an independent financial advisor.  They are able to provide you with a wide range of products from different suppliers.  Their services are not free – they could charge you as much as £500 for a consultation, but bearing in mind the effort they will put into making the best recommendations for you, and the amount of money you could gain by making the right investment, this may well be money well spent.  Our friends at Oscar have a list of Christian organisations willing to give financial advice.

The government has a very helpful website with simple explanations of pensions, and further information can be found from the Pensions Advisory Service, an independent organisation which has a lot of useful information on its website.

A pension plan can be a very effective way to save for your retirement simply because of the tax breaks.  But be careful – the benefits can be eaten away by high charges and poor management so make sure you keep track of its performance.  Because of the way pension funds grow, they are most effective when you start investing at a young age.  If you’re within 10 years of retirement, the set up costs can mean it would be better to leave your funds in a building society.

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