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Sun 24 Sep 2017 15:02 GMT
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With Profits Pension Plan

With Profits Pension Plan
Published:  22 Feb at 7 PM
The with profits pension plan is one that is aimed at those wishing to put money aside for when they finally decide to retire and settle down. As you are working you make monthly contributions into your plan that is then invested in the with profits fund. The idea is that in years when it performs particularly well, it pays a bonus into the fund in order to cover the lesser performance in poor economic times.

A with profits pension is a good choice for individuals who may not have an occupational pension for whatever reason. Whether this be because you are unemployed, your employer does not offer a pension scheme or even that, for whatever reason, you decide to opt out of their pension scheme. It may also be a good choice for individuals who may want to put away more money for retirement than their occupational pension would allow.

One advantage of this kind of pension plan is that the individual can choose what areas your pension plan invests in from the three basic choices of shares, property and alternative investments. This is good as if you feel that the property market is set for a downturn or you feel uncomfortable investing in the volatile stock markets. The other benefit is that your investment can really increase substantially by the time you get to your retirement and with constant reviews of the investment pattern and the individual investments, you can also be assured that your investment remains protected.

In the with profit pension, you will get various options with regards to investments, shares, and property assets, so there is more than one option when choosing your investment. The flexibility of the with profits pension plans can change depending on your chosen providers, so it is essentially to discuss each possible plan with the provider prior to deciding which is right for you or even better, speak to an Independent Financial Adviser who could provide you with unbiased advice on which is best for you.

Whilst the with profits pension is comparatively flexible there is also various potential restrictions that need to be taken into account when deciding if it is right for you. For example, there will often be monetary punishments for individuals who decide to withdraw there money from the plan and use it elsewhere. There is also the potential stockmarket risks in that poor performance one particularly year or even over a period of time, may result in lower returns.

This kind of pension offers another option for individuals considering investing in their future, and those with no access to work or other pensions. It can also act as a good way of topping up for individuals who have company pension plans in a lot of circumstances (subject to eligibility). On the other hand, it is important to remember that bad investment performance can often affect the safety of your pension. For this reason, if you don’t know too much about it is important to obtain financial advice from an independent professional.

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