Most of us know the benefits of saving money for those items that we really want to buy, for a example a car or a house. You may not relaise that one of the most expensive things you will ever buy in your life time is not a house, but your retirement. Perhaps you have not considered the concept of buying your retirement just yet.

This is exactly what you do when you put money into a retirement plan, in order to meet future regular living expenses when the annual salary is no longer deposited into your bank account. This concept is paying today to meet the cost of tomorrow's living expenses.

This may sound hard hitting and seen an impossible task. The wage or salary you receive from employment may be inadequate to meet your needs. However, you may have more pressing financial needs and goals than buying something for the future, or you may decide to wait for few more years before you start saving to meet these expenses. Whether you are 18 or 56, you can take steps towards a better and more secure future.

Personal Pension Plan

Established in 1986 under the Social Security act 1986; that allows individuals to make their own pension arrange using the tax – privileged investment plan called Personal Pension Plan (PPP). Also know as defined contribution plan or money purchase.

Future Costs

The costs of future years will be more expensive for the following reasons:

We are living longer after retirement
You will have to have to meet a greater portion of the cost of your retirement, whilst fewer companies are providing the traditional pension plans that gives some level of a guranteed pension

Many retirement plans, such as the Money Purchase Pension Plan offered today, give no guarantee of a pension at retirement and have some investment risk. The responsibility now rests squarely on the shoulders of the individual to take control of their retirement planning.

In short, paying for the retirement you truly desire is ultimately your responsibility - you must take charge, as you are the architect of your retirement planning. Pension planning requires:

Determination
Sound and consistent saving habits
The rigth knowledge
A well-designed financial plan
Starting early and making those regular affordable contributions with a built-in review program

Managing Your Personal Plan

To summarise, retirement can be a state of mind, as well as a financial issue. For most of the working population, the question in the minds of many is: Is it worth saving for my retirement when I may lose most of it? Do remember that you are not retiring form life - you are just moving into another stage of life. Many see this cycle as a 'New Career' of learning a new skill in time management and pursuing a favourite hobby. The answer to these questions are on your list of goals.

Overall: pay yourself first, save small amounts on the regular, make good use of the Pension Tax contribution, given by HMRC. This will pay Dividend later.

Self-Invested Personal Pension Plan (SIPP)

Self-Invested Personal Pension Plans (SIPP) is also a personal pension plan. It follows the same basic contribution rules and contributions are eligible for tax relief. The SIPP is established under trust - the trustee Controls the investments and the investment funds are limited to that of the plan provider. You can borrow against the value of the fund for further investments. Here are some questions on this SIPP:

How much can be borrowed? You can borrow up to 50% of the scheme assets
What can this be invested in? One example would be commercial properties
Who can be the trustee? The plan holder can be the trustee. Should the plan holder be the appointed trustee, they must have an approved administrator appointed to carry out investment transactions

Other points include:

The plan holder has greater freedom in what to invest in
The plan holder can have control over the investment strategy
The plan holder can appoint a fund manager or a stockbroker to manage the investments