From workplace pensions to personal plans and state pensions, with so many options to consider it's no wonder many of us don't like thinking about how we'll pay for our retirement. We want to remove the confusion and help make sure you know the differences between your options.
Here's a brief overview of three main options available to help you start planning.
A personal pension plan could be a good option if you’re self-employed, which means you won’t automatically be enrolled in a workplace pension. You’ll get tax relief at the basic rate and higher rate tax payers could claim back the difference. Pensions also grow tax efficiently and you can take 25% as a tax-free lump sum on retirement. You can either make regular or lump sum payments to your provider.
If you already have a personal pension plan, ask your provider for a forecast to find out how much you’re likely to get when you retire.The amount you’ll get when you retire depends on a few different things, including how much you’ve paid in and how well the fund’s investments have done.
The State Pension is a regular form of income that you receive from the Government once you have reached State Pension age. The amount you receive will be based on your National Insurance contributions. The age at which you reach State Pension age varies and is dependent on when you were born. You can find more details about changes to the Pension Age and how much you could expect to get on Gov.uk.
All eligible workers are gradually being enrolled in workplace pension schemes by 2018. This means a percentage of your pay will automatically be put into the scheme each payday.
Topping up your employer scheme can often be the cheapest and easiest way to boost your pension, employers often contribute to your workplace pension too. You can ask for a pension forecast to find out how much you are likely to get.
Most people work for between five and nine employers over the course of their lives – and often they leave a pension behind when they get a new job. To plan for your retirement, you’ll need to work out how much you’ll be getting from all pensions, which means you’ll need to track any that have gone missing.
For help tracking down an old pension, contact the Pension Tracing Service or see this helpful guide from the Money Advice Service.
It’s never too early to start saving for your retirement. With people living longer than ever before, we all need to save more. But because there’s always something more urgent to pay or save for, it’s something that many of us rarely think about.
Read about our key points to consider when planning your retirement below.
Put simply, a State Pension may not be enough for you to live on in your later years. How much your State Pension is worth could depend on how many years’ National Insurance Contributions you pay while you’re working along with other criteria. You can find more details on gov.uk.
If you keep working until you’re 65, you can expect that you’ll need to live off your pension for at least 20 to 30 years. You don’t have to retire when you are 65 and your employer can’t make you. Your retirement age is different to the age that you’re eligible for a State Pension.
Work out how much you’ll need to live on once you’ve stopped working, factor in extras like bigger energy bills, healthcare and even holidays. You might not need to include things like mortgage repayments and travelling to and from work. Once you’ve done that, take a look at all the pensions you currently have.
Are you saving enough or should you be putting aside more?
Whether it be an ISA, private or workplace pension, or even investing in property, the earlier you can start saving, the more time it will give your money to grow. Leaving things until later may mean that the amount you’ll need to save is unaffordable.
Earn up to 0.25% AER/Gross p.a. (variable) when you grow your savings by £50 or more each month.
Start saving from £1, instant access to your savings. Eligibility and criteria conditions apply.
Take advantage of the 2021/2022 tax free ISA allowance of £20,000. Find out how easy tax-free savings can be with one of our ISAs.
Aged 16 and over, UK resident and must not have subscribed to a cash ISA in the same tax year.
