Think of a term deposit account, and fixed term deposit accounts usually come up. Fixed term deposits happen to be popular because they are low risk investments that guarantee investment and give steady returns. They are still in use and being offered by all banks. However fixed deposits may not be effective during periods of low interest rates. Apart from fixed deposits, there are other saving and investment products which may be considered. One such product is the ‘Third Pension’ product.
The ‘Third Pension’ product is a private retirement pension scheme for your own personal benefit. It is specifically designed to help us save for our retirement nest egg. The income you will receive from a private retirement pension scheme will be additional to your pension income entitlement under the social security contributory pension.
A private retirement pension scheme has one major difference from other investment and financial products. The savings you invest in a private retirement pension scheme are specifically designated to be spent during your retirement. This is because the government provides an incentive by means of a tax credit to nudge you to save for your retirement.