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What is a private pension

Everyone who has paid national insurance contributions and tax, either through their employment or from government benefits is entitled to a state pension. Until 2010, pension age was deemed as 65 for a man and 60 for a woman. However, this has now changed and over the next decade or so the pension age is expected to raise. This is one reason a private pension is advisable, as you can make withdrawals on this whatever age you decide to retire.

When you take out a private pension you are actually making an investment. The monthly contributions you make towards your pension will be invested by your pension provider in whatever way they see fit. The most popular pension providers are banks, with the biggest high street banks offering competitive pension packages. Other providers include specialist firms and insurance companies. Who you decide to take your private pension out with is up to you although you will need to shop around before making a decision.

The type of private pension you choose will also depend on how much money you are willing and able to invest. Private pensions are suitable for everyone who has cash to invest but they are ideal for the self-employed, who may not have an occupational pension, and employees who work for a company with no option of a pension. If you are in employment and your company does offer a pension, you should look in to this before committing to your own private pension. You can always choose to take out a private pension to top up your work pension if you want to.

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