The Importance of Pension Insurance

Pension is a retirement plan in which the person makes long term savings to provide him with monetary support when the salary stops. So, pension provides you with an income when the salary stops to help you live the lifestyle you were living or want to live. UK has state pension plans which have been in place for more than 100 years. The occupational pension plan has been for even longer and was first recorded in the year 1670. Pension plans are very necessary as it helps people to live a stress free life without worrying about money even when their salary stops.

The pension insurance is a scheme in which the working people make contribution in lieu of some benefits. The importance of pension insurance is:

  • It allows you to invest a part of your salary towards use in future. It is of great help in the old age when other sources of income are nil.
  • The pension is provided by the state as well as by the employer and is known as occupational pension insurance.
  • The state pension scheme helps the people with no income or low income to live their life without any problem. Men and women can claim their basic state pension if they have reached an age of 60 and 65 respectively. The retirement age is now being made same for both men and women and hence will be the cause of great change in the future.
  • The occupational pension is provided by the employer where you working and is of great help once the employee is no more working.

The pension insurance scheme is applicable only if the insured belongs to Great Britain or Northern Ireland. However, under certain circumstances the insured is allowed to make contribution towards the pension insurance when he or she is working outside Britain. The pension insurance scheme can be availed if:

  • The potential insurance seeker is working and is within the pension age and also earning an amount equivalent to the primary threshold.
  • You cannot contribute to pension scheme if you are below 16 years of age
  • The contribution to the pension scheme ends the day the insured reaches the pension age as declared by the state.
  • Depending on your earnings you may have to pay class 4 contribution even if you have reached the pension age.