No matter how old you are, it is important to pay into a pension plan. When you are young, you may not even think of retiring or of getting older and may not realise the importance of this aspect of financial planning.
A pension is merely a tax efficient method of saving money with the specific purpose of securing a regular income for you, over and above your State Pension, when you stop working and reach retirement age.
It's never too early to start planning for your retirement.
The last thing your retirement should be is stressful for you or your family. Therefore, it is important to prepare a retirement plan sooner rather than later to ensure that when you reach the age of retirement you will have enough money coming in each month to cover the cost of your bills and allow you to live comfortably.
Although you will get a state pension of over £200 per week, (dependent on the level of your National Insurance Contributions you have paid), this will not be enough to keep you in your usual lifestyle and will barely cover your basic needs.
More than half of people in the UK either haven't been saving at all for their retirement or they haven't been saving nearly enough to give them the standard of living they hope for when they retire.
At present, many workers fail to take up valuable pension benefits because they do not make an application to join their employer's scheme.
In order to overcome this and encourage workers to save money for retirement the Government has introduced legislation where every employer must automatically enrol workers into a workplace pension scheme.
This is called ‘automatic enrolment’ and started at the beginning of October 2012 with staff who work for the biggest businesses, with others being signed up over the following six years.
For full details of the scheme go to our Automatic Enrolment section.
If you do not qualify to be automatically enrolled you still have the right to join your companies scheme. If you tell your employer that you would like to opt in to the scheme, they must allow you to do so.
If you are self employed or not eligible and/or have opted out of your company scheme, then you should start investing on your own to ensure that you provide for a regular income on top of your state pension.
In order to ensure that all companies have a Pension scheme readily available to them the Government has set-up the National Employment Savings Trust (NEST) - for full details see our NEST section.
The first and most important step in planning your pension is to set a retirement income goal so that you will be able to work out how much money you will require to save in order to live comfortably when you retire.
A guide to help you plan your retrement s available at GOV.UK.
Further advice on planning your retirement income is available from MoneyHelper.
For a simplied guide to retirement money planning go to which.co.uk.
A Guide to Pensions and Retirement including choosing a pension and how to making the most from your pensions, can be found at AdviserBook.
The Financial Conduct Authority (FCA) is a regulatory body in the United Kingdom that regulates the conduct of financial firms providing services to consumers including the regulation of consumer credit and maintains the integrity of the UK’s financial markets.
The FCA have brought in new rules, known as the Consumer Duty, which set a higher standard of consumer protection in financial services. The Duty means you should get: the support you need, when you need it. communications you understand. products and services that meet your needs and offer fair value.
Further information on the Consumer Duty is available at the following links:
It may be beneficial to discuss your retirement plan with a Financial Adviser.
To help you choose a Financial Adviser, click here.
Alternatively to find an advisor near you follow this link.
Alternatively, The Society of Later Life Advisers (SOLLA), a not for profit organisation, aims to assist consumers and their families in finding trusted accredited financial advisers who understand financial needs in later life.
Equity Release Schemes
If you are retired or close to retirement (over 55) and own your own home by using an Equity Release Scheme you can release money tied up in your house to supplement your income, undertake home improvements or pay for long term care - more information on Equity release Schemes can be found at our Equity Release Schemes Section.
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