Pensions Law

Why you need a pension

A pension ensures financial security upon retirement, for both you and your loved ones. A pension can provide; a lump sum at retirement, a long term return plan, a promise of family security in the event of death, as well as many other benefits.

Types of pensions

Many employers hold a pension scheme that pays a percentage of an employee’s wage, or matches any employee contributions, which is held in an independent account. Other options include; state basic pensions, the state earnings related pension scheme also known as SERPS, and personal pension schemes.

For advice on what sort of pension you may be entitled out of those detailed below, you may wish to consider speaking with an authorised independent financial adviser.

The basic state pension

Depending on an employee's contribution of National Insurance, up to £66.75 a week may be available through the basic state pension (Based on figures produced in 1999).

The male pension recipient age is 65, and women born prior to 6 April 1950 are able to claim a state pension at age 60, while those born post 6 April 1955 wont be able to claim until reaching age 65. Women born between the two dates, dependent on their date of birth, are able to claim their pension between 60 and 65 years.

This form of pension does not however provide sufficient funds to live off, so a supplementary scheme is recommended.

State Earnings Related Pension Scheme - SERPS

A governmental top-up scheme provided by the Government, supplying an additional return applicable to the earning taken within total work to date. Commonly SEPRS is for those who are not entitled to occupational pension, or do not own a personal pension. Upon retirement, the net pension entitlement is dependent on the length of time within the scheme, and earnings within that period.

Government plans to replace SERPS with a scheme from 2002 will not directly affect those already receiving SERPS, nor will it for those who expect to have SERPS benefits, these entitlements will still be paid when upon retirement.

Occupational pension schemes

Occupational schemes are provided by employers and are also more commonly known as company pension schemes. An employer will ordinarily pay a contribution towards long term retirement benefits, supplementing the employees’ additional contribution. Occupational pension schemes are considered to be the most profitable type of pension.

Retirement benefits ordinarily available are:

• a regular retirement income or a tax free lump sum
• benefits upon early induced retirement, i.e. through sickness or ill health
• benefits for spouse, partner and children in the event of death.

Personal pension schemes

A personal pension is an arrangement initiated independently; it is primarily for the self-employed or those who are unable to join an occupational pension scheme. Banks, building societies or insurance companies all supply personal pension schemes, and a return amount will depend on your savings contributions, although it is generally more affected by investment measures and interest rates than other schemes.

Get pensions advice from an independent financial advisor today