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What You Need to Know About Investing in a Personal Pension Plan

One type of personal pension is known as a stakeholder pension. This type of pension typically has clear terms and low charges as it has to abide by a standard set by the government.  You can purchase this type of pension through a specialist insurance company or via one of the larger high street banks. Because this sort of pension is complex, it is advisable a person seeks professional advice from a pension’s specialist before buying. Stakeholder pensions rarely appear on comparison websites because they are difficult to understand and this can make them harder to research.

As with many other investments, the money you invest in your personal pension is at some risk and there is always a chance you could end up with a return that is significantly lower than what you originally invested. Because of this it is advised you periodically alter your investments, gradually reducing riskier investments the closer you get to retirement age.

An alternative pension plan is the collective pension scheme, this is where the money you contribute to your retirement fund is pooled and used to buy certain shares and units. This plan is lower risk and is more likely to leave you with reasonable assets based on your pension contributions.

Every time you contribute to your chosen pension plan, the government offers tax relief on it. The basic rate is 20% tax return for every pound you invest in your own pension. With the future surrounding state pensions looking uncertain, this is the government’s way of influencing people in to providing for their own retirement while they have the chance.

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