Posts tagged: retirement

Government Employees Can Choose Their NPS Fund Managers

pension plansThe National Pension System (NPS) is a defined contribution retirement plan offered by the government. The plan is regulated by the Pension Fund Regulatory and Development Authority (PFRDA).

Subscribers must avail their Tier 1 NPS accounts with one of the PFRDA-appointed Point of Presence (POP). The contributions may be invested in 3 asset classes’ viz. equities, government securities, and corporate bonds. These funds are managed by professional fund managers designated by the regulator.

NPS is compulsory for government employees except the armed forces. The plan is optional for the private sector personnel. An increasing number of private sector employees are choosing NPS to take advantage of the various tax benefits available under the Income Tax (IT) Act.

Here is how government employees may choose fund managers

Permanent Retirement Account Number (PRAN)

Applicants are updated about their PRAN application status through an email or SMS. This number is unique for each subscriber, which makes the NPS account completely portable. The applicants may check the status with the POP or the regulator’s website in case the PRAN card is not received.

Choosing the fund manager

Government employees did not have the liberty of choosing their fund manager as available under the All Citizen Model. The state or the central government had the responsibility of choosing the fund managers. However, recently, PFRDA announced that public sector employees will now be at par and may choose their preferred fund manager to handletheir NPS contributions.

Being able to choose their preferred fund manager provides the subscribers an opportunity to assume higher risks and enjoy better NPS interest rate. The returns on NPS contributions depend on the percentage that is invested in the different asset classes. Therefore, by investing the maximum permissible amount (50% of the total annual contribution) in equities offers investors the chance to earn higher returns.

Changing the fund manager

The private sector personnel also have the option of changing the fund manager in case they are unsatisfied with the services. The proposed modification by the regulator also makes the option of changing the fund manager available for the government employees.

Opportunity to earn higher returns

The public sector employer matches the annual contribution made by the employees to the NPS. Having the option to choose their preferred fund manager allows the subscribers to take advantage of investing more in equities, which may potentially increase their returns.

The NPS corpus may be withdrawn on maturity. Investors may withdraw 60% of this amount as a lump sum. The balance must be compulsorily converted to an annuity plan. Subscribers may use a pension plan calculator to estimate the potential returns on their investments.

The revised norms for government subscribers make NPS beneficial for the investors. They may now choose the fund manager and the investment breakdown to maximize their returns.However, the existing system of the government choosing the fund manager will also continue for those subscribers who do not want to make their own choice.

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Retired? How best to earn some extra cash

retirement moneyIt’s extremely unfortunate, but with rising living costs, many people who’ve retired are discovering they have to take on work to make ends meet. Sometimes pensions may just about cover expenses, but not provide people with the cash to enjoy things they’ve always wanted to do. In other scenarios, retirees’ income isn’t even enough to pay for food, heating and the plethora of other expenses associated with modern day life. Often, discovering they have to go back to work can be very upsetting for people. But there is a great range of options available if individuals need to make some extra cash.

One great way to earn some extra money is to utilise the skills people already hold. For example, nurses can find an abundance of work by picking up a few temporary shifts here and there. Home care services also require nurses, and a variety of shift lengths allow people to choose the best working pattern to suit their needs. Likewise, retired accountants can find work bookkeeping or helping contractors fill out their self-assessment forms. Other retirees who have plumbing or carpentry skills make the ideal local handyman for neighbours to call on, whilst those who have creative expertise, such as photography, could turn to wedding and event photography to make some extra money.

Another great option for innovative and entrepreneurial retirees’ is to set up a small home business. Those with good English and writing skills could become copywriters, creating content that can be used for websites and press releases around the world. Individuals who love crafting could set up an eBay or Etsy shop and sell their work, whilst keen bakers and cooks can turn ingredients into artisan products to be sold at farmers’ markets or to local restaurants.

For those not wanting to set up a business, part-time work might also be found close to home. Many supermarkets and high street stores have policies encouraging the hiring of older people, so it’s worth visiting these shops and taking a moment to speak to a manager to see if any vacancies are available. Local newspaper and newsagent windows are also a great source of wanted ads, and part time or temporary work can often be found listed there.

It’s important for anyone wanting to take on extra work to pay very close attention to their finances and ensure they don’t start to earn too much. Whilst many people want to earn a little money to supplement their income, earning too much could put pensions into jeopardy, so it’s crucial to do a little research and discover the personal income limits before undertaking work. Unfortunately, there are also a few unscrupulous individuals out there waiting to take advantage of older people, so individuals wanting work should never send money to agencies claiming to find jobs for a fee.

Taking on a small job when retiring can actually be very enjoyable, not only providing a little bit of extra cash, but also giving people an entirely new social circle; and, with retiring being an ideal time to make a career change and try something new, getting a job can bring about a new lease of life.

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10 Tips for More Successful Retirement Planning

Retirement planningPlanning a retirement lifestyle is one of the single-most rewarding aspects of working hard all your life. However, this planning is oftentimes wrought with worry, because many people do not understand how to do this successfully so they can live out the best years of their lives in comfort.

From how and where you will reside to how you will care for personal health and end of life decisions, the decisions you make now are critical to successful retirement planning. Here are some helpful tips to help guide you on this journey.

1. Start a retirement fund now. You may have a few years until retirement age, or you may just be starting to think about a retirement plan. Whatever the case may be for you, experts advise planning your retirement with an investment strategy as soon as you can. The sooner you can start to put away money, the more you will have accrued in savings and interest by the time you are ready to retire.

2. Focus on living frugally. The trouble with retirement planning is that some people fall into the trap of trying to get too much stuff early life, which only leads to long term debt. Spending your life paying off debt interest takes away from your ability to dream about the future. Living frugally now pays off later on.

3. Make your “bucket list”. It’s time to start thinking about all the things you’ve always wanted to experience in life. If you’ve put off traveling or taking up a hobby of some sort, now is the time to include this into your retirement planning. This gives you a measurable goal that will keep you on track.

4. Choose affordable living arrangements. Whether you plan to own your home in a few short years, or you want to move in with family; the decisions you make now should include your life needs as a retiree. You may realize that a large house will be too much to manage in your older years, or you may want to have a community of others in your age group as you advance in life.

5. Research services and support for retired people. A portion of your retirement fund will be spent on your personal care and health concerns as an older person. Be sure to plan for these aspects as you put your retirement plan together, considering the advantages of long term care insurance and retirement assisted living communities.

6. Get your will and legal affairs in order. As soon as you are able to, have a personal will drawn up and kept with your lawyer’s office. Let your children or siblings know where to find this information, and assign a power of attorney who can handle things for you if you become ill or incapacitated at any time.

7. Set aside tax free dollars. Being smart with your retirement savings also means investing in the next generation, while enjoying a nice tax shelter. While you can only put a certain amount into your 401k and IRAs each year, you can also put tax free money into 529 plans for your nieces, nephews and grandkids who plan to go to college.

8. Start a second-life career. Most people who retire often want to remain active in other things than leisure living. Consider your talents and experience, and develop a flexible and enjoyable second career path. Perhaps going back to finish your college degree, or starting a home-based business is in order.

9. Work with a retirement investment planner. Getting the most from your retirement often requires the support and guidance of an expert. Periodically review your investment portfolio with a trusted and qualified retirement professional.

10. Pay down debts and reduce overhead. Once you near retirement, consider that you will soon be living on a limited income. Therefore, you want to get your debts paid down as much as possible. Eliminate the burdens of too much property by selling now.

Retirement is a time to celebrate. You can be better prepared and enter this exciting time of your life by planning ahead and reaching your retirement goals in style.

Julia Dennis writes about Eco Friendly Senior living facilities and other assisted living topics for Friendship Village. When she’s not writing she enjoys running and spending time with her children.

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How Will The Flat Rate Pension Affect You?

Pension after retirementAlthough it isn’t due to be introduced until 2016, the flat rate state pension is a major shake up of the retirement benefits system and will have an impact on anyone retiring after that time. It’s therefore important to understand what it means and to carry out a pension review accordingly.

If you’ll be retiring before April 2016 then the changes won’t affect you and you’ll be paid a state pension under the current system. Currently this is £107.45 a week for the basic pension or £142.70 if you get the additional pension based on National Insurance contributions or you get pension credit.

Retirement After April 2016

If you reach state pension age after April 2016 then you’ll receive the flat rate pension rather than the existing one. This involves some major changes as follows:

1. You’ll need to have made National Insurance contributions for at least ten years to qualify for a pension (currently it’s only one year) and this will only get you £41 a week.

2. To get the full state pension you’ll need to make 35 years’ worth of NI contributions (currently you only need 30 years).

3. With 35 years’ NI contributions you’ll receive £144 a week at today’s values. Since state pensions are adjusted for inflation this is likely to be more when the policy comes into effect. The new pension will be adjusted in line with the CPI index or 2.5% each year, whichever is higher.

4. The second state pension, pension credit and other top-up schemes will cease. However, if you’ve already built up an entitlement to a higher pension through second pension or SERPS contributions before 2016 this will be protected but you won’t be able to add to it.

5. You’ll be able to take time out to raise a family and still build up state pension qualifying years, which isn’t currently the case.

6. Eligibility for a pension will be on an individual basis, so married couples will each get their own pension rather than the married couple’s rate that’s paid at present. The other side of this is that a widow without enough qualifying years for a full pension will no longer get a portion of her husband’s pension after he dies.

7. If you’re still in a final salary pension scheme with an employer you’ll end up paying more in NI contributions as the contracting out option will no longer be available.

8. The state pension age will be reviewed every five years starting in 2016. It’s currently planned to increase it to 66 in 2020 and 67 in 2028.

Additional Pensions

Because the changes mean the end of the second state pension if you need to increase your income in retirement you’ll need to look at other means. These changes overlap with the government’s plan to have all employees enrolled in a workplace pension scheme which will give them an additional means of saving for retirement.

Low earners and the self-employed, who may in the past have found it hard to build up enough contributions for a full state pension, will benefit most from these changes.

If you’re on a higher income want to save more for your pension then you’ll need to look at other alternatives outside of National insurance such as starting a private pension plan or a SIPP. If you’re in a pension scheme with an employer you could also look at making additional voluntary contributions (AVCs) to boost the value of your pension pot.

Kay Brown is a writer who has a keen interest in personal finance. With the imminent changes to pensions, she suggests conducting a pension review so that you know the impact that the flat rate pension will have on your retirement.

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Getting 401k loan as a mortgage solution

401k loanThe 401k loan is being availed by a lot of moderate income people. Basically, availing this loan is the loan from your own account. The retirement balance provides the grants of the 401k loan. Making a home is dream of everyone. And people seek money when they need to build up their own home. Nevertheless, a lot of mortgage solutions are available in the market.

But, those might not be affordable to many for the high rate and non comfortable terms. Nevertheless, the 401k solutions can be very comfortable in these matters. So, you can easily get to pick the 401k loan as mortgage solution. Here you get to know the detailed discussion in this regard.

401k loan as mortgage solution:

You can easily get the 401k loan as mortgage solution. Here you get the issues which can convince you to get the loan as mortgage solution. Here you get those issues which are too much convincing to avail a 401k mortgage solution. This new service offering $2500 Bad Credit Personal Loans for Borrower in Financial Trouble -PRNewswire-iReach for getting approved for mortgage loan.

Low rate:

The best part of the 401k financial solution is that it offers the borrowers with very low rate and that is the reason it is easily affordable in all respect. The 401k financial solution offers the borrowers with an interest rate of only 1% and this is certainly a very low rate solution. If the comparison goes with the other home loans available in the market, those will tend to get higher.

So, you can grant this financial solution as a favorable one when you need a mortgage loan. Having such a low rate loan might not be a possible idea with the traditional loans. So, you can easily depend on this solution.

Long term:

Another good part of the 401k loan is that it offers the borrowers with long term solution. The best part of the long term loans is that it offers the borrowers with easy loan rate. And from that point of view, you can easily manage to afford the debt. Though long term debts are a bit troubling, it is manageable if you can get to be a bit smart. So, you can certainly pick the long term financial solution with the 401k grant program and use it as a mortgage solution.

Easy repayment system:

The repayment system of the 401k loan is very easy. In fact, you can not avail a shorter amount of loan from this source. So, for a mortgage solution, you can grant this program as a perfect one. Also, you will not need to take a lot of tension about the debt repayment.

Nor, you will need to take the hassle of distributing the money. The debt repayment installments will automatically get deducted from the account of your salary and thus you can easily get the payment done. You will get a salary paycheck with the deducted amount.

So, in all respect, you can treat the 401k loan as a better mortgage solution and certainly you will find it as most favorable that the traditional mortgage solutions. Click here for more information.

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