What Are The Key Advantages Of A fidelity Retail Pension Scheme


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The Fidelity Retail Pension Plan was launched in the United Kingdom back in 1981. The plan allowed employers to offer pension protection to their employees that came from investments in publicly traded securities such as the stocks and bonds, and from bonds sold from the funds of international insurance companies. At that time there were very few private companies in the UK that provided this type of investment option. However, since then many other international companies have added the retail pension scheme to their list of options. As a result the UK retail pension scheme has expanded to cover more employees and to attract new members.

Does Not Come With The Hefty Fees

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The attractiveness of the Fidelity Retail Pension Plan for employees and employers is that it does not come with the hefty fees that would be associated with some other types of plans. All of the investment earnings are invested by the fund manager in stocks and bonds of large international corporations. The money earned from these investments is used to purchase future annuities for the employee and pay him or her the amount of the future annuity upon retirement. This allows the company to continue paying the employee until they reach retirement age.

For the employer the attractiveness of the Fidelity Retail Pension Plan is also in the fact that he only needs one payment for his employee each month. There is no need to pay income tax on any of the earnings from the investment fund. This tax deferral is one of the main attractions of the retail pension scheme for employees and employers alike. One of the other attractions is that the annuitant only has to draw one check each month and he does not have to worry about doing so every month.

Attractiveness Of The Deferred Deposit 

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One of the reasons that the UK retail pension scheme has become so popular in recent years is the attractiveness of the deferred deposit element of the plan. Once you have made your initial investment and your retainer, you will only need a single check to pay the taxes. The money you save can be used immediately. The amount of the deferred deposit also varies by plan. Some plans allow you to choose the type of deferred deposit and some have a level of taxation at the end of the contract.

No Penalties For Early Withdrawal

A major attraction of the annuity is that there are no penalties for early withdrawal. Even if your savings do not grow to meet your retirement needs, you will not face penalty fees. Retention of an annuity can also be voluntary, in which case you may withdraw at any time during the contract. This can be done without penalty fee.

With this retail pension scheme, there is a guaranteed minimum guaranteed income. If you are under the age of sixty-five and you start receiving an annuity you will receive a fixed rate. As you progress through the scheme, you can choose to withdraw a percentage of the initial guaranteed income up to a maximum limit based on your personal investment choices.

 Final Thoughts

The fees charged for the commission of a Fidelity Retail Pension Scheme vary according to the independent firm you choose to deal with. However, they are usually not more than two percent of your initial investment. There are also no restrictions as to how you withdraw your money. It is quite easy to understand why more employers and employees alike are leaning towards investing in a retail pension scheme. There are no penalties for early withdrawal, and your money grows tax-free.

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