What is the main purpose of a pension?

The main purpose of a pension is to help individuals save for retirement. A pension scheme is designed to accumulate funds over an individual’s working life, which can then be accessed during retirement when individuals are no longer earning a regular income from employment. It serves as a financial safety net, ensuring that people have a source of income to support themselves after they stop working.

Unlike options related to immediate cash flow, loans for purchases, or funding everyday living costs, a pension is specifically focused on long-term financial planning. It aims to provide financial security and maintain an individual's standard of living in their later years, allowing them to enjoy their retirement without the worries of financial instability.