Firstly you should have a pension, currently the basic state pension is £113.10 per week. From April 2016, most retired people will get the “new state pension”, it will be about £150 per week, but is dependent on your NI contributions. Either amount only offers an income well below £10,000 a year, so whatever happens it would be better to also save into a private or workplace pension.
Secondly don’t start a pension until too late. Legal & General have calculated that if you want a private pension income of £5,000 a year you would have to save £216 a month if you started at the age of 25. If you waited until 35 you would need to save £281 a month. Delay it another 10 years, until 45, and you would have to contribute £405 a month. Three key factors determine how much your pension will be two of these you can control - the amount of money you put in and the length of time you invest it for. The investment returns are not so manageable but the sooner you start saving into a pension, the better.
If your employer offers a workplace pension scheme it’s a good idea to take it up as many companies match employees’ contributions. By saying no you will effectively be turning down free money. By 2018 all companies will have to “auto-enrol” workers into pension schemes and will have a legal obligation to contribute to them, although employees will have the choice to opt out.
Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE
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