Understanding Pensions and Their Importance

Pensions serve as a crucial replacement for income after retirement, enabling individuals to cover living expenses when they are no longer earning a salary. The basic premise is that pensions help individuals afford essentials such as housing and food during retirement years. While some may rely on assets or investments to generate income post-retirement, for most people, a pension acts as a necessary vehicle for saving and managing funds until they are needed. It is noted that pensions come with tax advantages, as contributions are often made before tax, and growth is tax-free, making them an appealing savings option.