How to invest for the future – What are your options?

Know your options when saving for your retirement.

13:44 26 January 2013

More and more people are now seriously thinking about building their retirement fund. If you’re one of them, the following are your best options:

State Pension

This one is the most common options available to Britons. It’s for people who are employed and who are paying National Insurance Contributions. The payments made are used to build up a basic State Pension, which you’ll receive when you retire. 

Defined Benefit Schemes (DBS)

This is one type of pension scheme being offered by some companies. This is calculated using the number of years you’ve been with the company, your salary and retirement, and the proportion of earnings you receive as a pension for each year that you’re a member.

There’s also Defined Contribution Schemes (DCS) where you put a percentage of your salary into a fund that is invested in the bond or stock market where your money will grow over the years before you retire. Once you retire, you are allowed to take some of the cash to buy an annuity.

Personal Pension

This is where you make contributions to a fund that is managed by a pension provider. Just like DCS, the fund is invested on shares, stocks, and other types of investments. There’s also Self-Invested Personal Pensions (SIPP) where you have control over your funds. You can decide where to invest it based on your goals and risk appetite.