Should I buy a pension?
“When you think about the next phase of your life you may feel excited, sad, nervous or all of these, and a lot of other feelings too. Knowing your options will help you feel prepared. “
One of the most important financial decisions you'll ever make is what to do with your retirement savings when you reach retirement.
Most people use the amount they’ve saved up in their employer’s retirement fund to buy a monthly pension. This ensures that they get an income during retirement once they’re no longer earning a salary.
Different pension types
If you decide to buy a pension, then you’ll want to know which type of pension will meet your needs and personal circumstances.
Do you know what type of pension would best meet your needs?
You can choose between two main pensions:
- a guaranteed pension for life, or
- a flexible pension that is linked to the value of your investments and must be managed
You can even choose a combination of the two.
You’ll also want to know what the advantages and disadvantages of each pension type are.
How your retirement savings are taxed depends on:
- how much of your savings you use to buy a pension
- how much you withdraw in cash