PLANNING
Reduced assistance
The government, in these days of austerity, is struggling even to maintain the
meagre state pension, which only covers very basic living costs.
Companies too are feeling the strain and do not offer
the generous defined benefit or final salary pension
schemes available to previous generations. This is
because agreeing to pay an employee two-thirds of
their final salary, for example, as they live longer, can
bankrupt a company and many firms already carry
these pension black holes on their balance sheet.
Almost all private sector employers now offer
defined contribution pension schemes to their staff,
which do not guarantee any form of fixed income
in retirement related to your income while at work.
Effectively, they depend on how much you and
your employer put in, for how long and how much
this amount grows over time.
Your company pension may not be enough and you
may want to consider supplementing this with an
additional personal pension or Self Invested Personal
Pension (SIPP).
Key points
You need to take responsibility for
your own retirement
The state is trying to reduce the cost
of pensions
Your company will be trying to reduce the
cost of employee pensions too, and if you are
self-employed, you are completely responsible
for yourself
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