What is a pension?

A pension is a way of saving money to ensure a comfortable retirement.

In the UK it has major tax benefits.

It's usually regarded as the best type of retirement plan for the vast majority of people, who, unless they're rich, really do need to save for old age. (The state pension is too little for most to rely on alone).

While there are alternative ways of saving these usually come with their own risks. The pension is generally seen as the best option for most people - not least because of the extra money you get to put in because of the tax benefits. (See how it works below).

However there is controvesy about saving money via a pension with occasional mutterings heard along the lines of "never give any money to a pensions company".

But you'll also hear experts saying that before pensions were invented (in the 19th century) people were desperate for something to be done. If they didn't exist there'd be a lot more moaning.

The trust problem is largely due to weak regulation in the past. basically the highly paid suits in charge weren't always as trustworthy as they claimed they were, which led to various abuses (see scandals).

These resulted in political action and the formation of the Financial Services Authority in 2001. It is now hoped this new overall regulator will greatly strengthen confidence in the British personal finance business.

Another major recent change was the introduction of the new Stakeholder pension. This is a simple, cheap and flexible type of pension which was also designed to improve things for the public.

It really would be the best buy for most people and in some respects makes the need to do a lot of research less relevant than in the bad old days of high charging, inflexible pensions when this website was launched a couple of years ago to help steer you through the minefield.

There are four main types of pension

The Personal Pension

The Company / Occupational Pension

The Stakeholder Pension

The State Pension

There are sections on each of these you can look at or you can read more about the basics

Pension Basics Contents