With the importance of saving for a rainy day higher than ever, it remains a curious fact that there are so many myths and misconceptions about pensions flying around.
- Pensions can be accessed in time of unemployment and not just retirement.
When we think of pensions our first thought is that we are saving up for when are retired and unable to work. This remains broadly true. However, it is possible to access your contributions even before retirement. In the event of retrenchment, redundancy or other termination of your work contract, there is an option to receive your benefits during your time of unemployment.
- Pension schemes can’t invest your money anyhow.
There are certain rules and regulations that govern the use of members’ contributions. Considering pension schemes are holding onto people’s hard earned monies set aside for the future, there is need to protect it in some way. This means pension managers can’t just invest in every new trend. Restrictions are in place to keep your money safe.
- Self-employed workers can take out a pension scheme as well.
Pension scheme contributions are more often than not made up of payments by employers and employees. And these are generally from large to medium size corporations. That doesn’t mean self-employed workers and small business owners can’t join a scheme.
- You can contribute more than the statutory amount.
The law does state a minimum amount that must be contributed by the employer and employee. That doesn’t mean the amount is mandatory. It only serves as a minimum. Both employers and employees may choose to go above the limits set.
- If your employer goes bankrupt, you lose their contribution.
The security of a pension scheme is that it is independently managed. That means the safety of your contributions is completely separated from the well being of your employer. Once made your contribution shall be well taken care of.
- You can only join a pension scheme at the beginning of your work career.
The old adage goes, the best time to start saving is yesterday. The second best time is today. This couldn’t be more true than of pensions. While it is always better to ensure your place of employment has some sort of pension scheme up and running as soon as you join the work force, it is never too late. Speak to your employers and an independent pension service provider about what options are available to you.