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Information on Different Pension Plans

The most common of pension plans is the state pension, which was originally introduced to prevent people experiencing poverty in old age. The original state pension was paid when a man reached 65-years of age and when a woman reached 60. However, radical changes in 2010 introduced a slow increase in pension age, which is thought to reach 68 years of age for both men and women in the next 20 years. The state pension was first introduced in 1909, following the introduction of The Old Age Pension act.

Occupational pension plans are an arrangement maintained by a person’s employer. Such arrangements usually see the employer paying the employee a fraction of their salary through their retirement. How much the employer has to pay is usually based on how long the employee has worked for them. Occupational pensions may also experience some tax-relief although this tends to be temporary and also based on how much of a pension is being paid. Unfortunately a poor economy, reduced interest rates and an increase in life expectancy mean occupational pensions are no longer commonplace.

Personal pension plans are maintained by the individual, usually through a specialist pensions company. The majority of these plans see the individual make a series of investments throughout their working life. When the person reaches their chosen retirement age they have the option of purchasing a full pension plan. An individual who decides to take out a personal plan will experience similar tax benefits as those who have an occupational pension.

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