Information on retirement provision
A retirement provision policy is a form of insurance intended to give people financial security once they have reached retirement age and their income from employment ends or is reduced. There are various kinds of retirement provision policy, but in general the policyholder pays regular contributions to the insurance company throughout their working life in order to build up a financial cushion for the future.
Some retirement provision policies are unit-linked, which means that part of the contributions is invested in investment funds. Others are built around a guaranteed minimum rate of return, which may however be lower than the return a unit-linked policy can achieve.
As a rule there are various tax advantages to paying into a retirement provision policy. If the policy meets certain criteria, for example, it can help reduce the policyholder’s tax burden.
Once the agreed term of the policy has been reached and the policyholder retires, they can receive a regular pension, a single lump-sum payment, or a combination of the two.