Page 10 - Group Insurance and Retirement Benefit IC 83 E- Book

available for any given amount of capital is likely to be poor. That said, it does pay to

―shop around‖ for the best quotations.

HOW ARE PENSION SCHEME MONEYS INVESTED?

1. Retirement Annuity Contracts (Self-Employed and Non-Pensionable
Employment)

Retirement Annuity Contracts or Personal Pension Plans are primarily for the self-

employed, but are also designed for people who are not members of pension schemes in
their places of employment. They are described in more detail. The investment position

under these contracts is fairly straightforward. The person who is paying the pension

premiums can choose the insurance company that is to manage or invest them.

In the first place, the individual must decide what kind of investment he/she needs – for
example, a traditional with profits endowment /deferred annuity policy, or an alternative

unit-linked fund. If he/she chooses the traditional with-profit policy, this narrows that
range of providers available to a small number of insurance companies.

If he/she selects the option of a unit-linked fund, this will certainly open up much wider
variety of choices. Some insurance companies offer a very wide range of funds in which

the money may be invested – and the choice rests with the individual who pays the
premiums. Other insurance companies offer, not only a range of funds within their own

management, but also the services of other investment managers, including investment
banks. Once the manager is selected, the individual can then choose whether to go for a

―mixed‖ fund, in which the manager is investing in different kinds of assets, including

ordinary shares, government and other fixed interest stocks and possibly property. There
can be further choice available when it comes to ordinary shares (equity) investment, as

the manager may offer a range of funds that invest in different markets, such as the UK,

the United States, Japan, and so on.
There is often considerable freedom to switch between these funds as time goes on, so

that control of the investment remains with the premium payer. Funds can now be moved