Pension Awareness Day

Thursday, 15 September 2016

On the 15th September it’s Pension Awareness Day. This annual event started in 2014 and aims to educate people on the need for pensions and encourage saving for retirement because as a nation we’re not saving enough. Too many people are finding themselves in poverty in their later years because they didn’t realise how little they would receive when they retired.

How do pensions work?

In simple terms, a pension is a long term savings plan. Whilst you’re working you can put money into it, your employer will also contribute and the government will give you tax relief on your contributions. You won’t be able to touch the money in your pension fund until you reach retirement age so it’s important you only save what you can comfortably afford.

To find out about the different types of pensions available, please visit The Pensions Advisory Service website 

Why do I need a pension?

When you retire, you’ll need your pension to live on for the rest of your life.Pension awareness day A report by Public Health England (published February, 2016) revealed that women can expect to live for a further 21 years at age 65, 13 years at 75, 7 years at 85, and 3 years at 95 and that men can expect to live for a further 19 years at age 65, 12 years at 75, 6 years at 85 and 3 years at 95. To get a rough idea of how long you might need your pension to last click here.

The current state pension is designed to only provide for your basic needs and trying to make it do more than this is extremely difficult. We don’t know what’s going to happen to the state pension in the future so if you’re not retiring any time soon, things could have very well changed by the time you do. 

How bad is the situation?

In February 2013, the Department for Works and Pensions released a report which stated that there were an estimated 11 million people currently working that were not saving enough for their retirement.

They found the main reasons were:

  • People see retirement as being a long way off and something they will consider later.
  • There was confusion over how pensions work.
  • Budgets were tight so many didn’t feel they had any spare cash to put into a pension.
  • People felt they might lose means tested benefits if they saved.

The Government believed that automatic enrolment was the way forward and this began in October 2012. By February 2018, they aimed that everyone eligible should be enrolled. They would give people the option to opt out but hoped that the vast majority would remain in the scheme and save towards their pension.

How much must I pay into my pension?

There are minimum levels of contributions that must be paid into your workplace pension scheme but you can give more if you wish. Remember, the sooner you start saving and the more you put in, the bigger your pension pot will be when you retire. Next time you receive a pay rise, why not put some of it towards your pension? You’ll be glad you did in the long run. 

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