Everyone needs to plan for retirement. People are living longer and healthier lives, so these days it’s even more important to think about how and when to save for retirement. Retirement can last for 20 or 30 years or more. The basic State Pension is a start but it may not be enough to give you the standard of living that you want.
So, you might want to consider another source of retirement income. It’s never too early to start saving for your retirement.
What The State Provides
While you’re in paid employment, you are usually paying National Insurance contributions. This means you are building up the right to get a basic State Pension when you reach State Pension age.
If you are paying a certain level of National Insurance contributions, you may also be building up an additional State Pension called the State Second Pension (previously known as SERPS - State Earnings Related Pension Scheme). If you’re self- employed you cannot build up an additional State Pension. You can check out your state pension and other pension information on the Gov UK website.
Pensions At Work
A new law means that every employer must automatically enrol workers into a workplace pension scheme if they:
|•||are aged between 22 and State Pension age|
|•||earn more than £9,440 a year|
|•||work in the UK|
This is called ‘automatic enrolment’.
Check if the new law applies to you and when you may be enrolled into your employer’s scheme.
If you’re already in a workplace pension scheme, you may not see any changes. Your workplace pension scheme will usually carry on as normal.
But if your employer doesn’t make a contribution to your pension now, they will have to by law when they ‘automatically enrol’ every worker.
The Gov UK website provides information about the types of workplace pensions that are available.
|•||Types of workplace pensions|
|•||Click here to print entire guide|
The Money Advice Service has a pensions toolkit on automatic enrolment.
If you wish to top up your workplace pension or if you are self-employed you may decide to contribute to a private pension. You can choose a stakeholder or a personal pension. With a private pension, you choose the provider and where you want your pension contributions to be invested.
You can use the Money Advice Service pensions calculator to work out how much of a pension you can expect to receive when you retire
Personal pension charges may be similar to stakeholder pension charges, but some personal pensions are more expensive than stakeholder pensions. You can compare pension features and charges on the Money Advice Service pension action plan.
Planning for retirement is a balancing act. This is an area where professional advice is highly recommended.
By law, most financial firms in the UK must be authorized by the FSA, the UK’s financial watchdog. So always ensure that you use an authorized firm. You can check whether a firm is authorized by checking the FSA register or by calling the FSA Consumer Helpline number on 0845 606 1234.
If you want to find a local financial adviser click here and you will be given details of three local advisers.
Pension Wise - a new free impartial guidance service
Pension Wise guidance specialists don’t recommend any products or companies and won’t tell you how to invest your money.
How to access the service
More information can be found on the Pension Wise website at: https://www.pensionwise.gov.uk/