A pension should be taken “as seriously as you take your life”, according to a financial adviser at a leading chain of Lincolnshire solicitors.
Daniel Elkington, Independent financial advisor at Chattertons Solicitors & Wealth Management, which has seven branches across the county, has issued the advice during Pensions Awareness Week, which ends on Friday, September 15.
Daniel said: “Everyone knows they need a pension, but pensions are confusing. The government is hugely confused by pensions; we’ve had fairly significant changes to pensions every year for the past decade barring 2016.
“The changes didn’t apply to final salary schemes either; making pensions even more confusing. Even worse; all public sector schemes – including MP’s pensions – have either been altered recently or are under review and we’ve got auto-enrolment. How on earth is anyone supposed to cope?”
Pensions tend to only come in two forms – Defined Contribution (DC) and Defined Benefit (DB). DC means you know what you have paid in, but you do not know what you are going to get out. DB means you know what you are going to get out – but you have no idea how much it will cost.
Daniel added: “With pensions, it is fairly easy to get baffled by the terminology related to what kind of contract you have, people should not be put off by this, securing funding for your retirement should be a priority.
“Often the terminology just naming a pension is confusing. Once you’ve worked out whether it is DB or DC you can start to make some progress on what you can do with it.
“The word Pension comes from the Latin pensio meaning ‘income’. Legally speaking a pension is suspended earnings, pension beneficiaries are not voluntary, but have been given valuable consideration and you should take them as seriously as you take your life as you have given part of your life in exchange for your pay and pensions.”