Saving for Retirement

What is a pension?

Retirement is not something that is just “for old people” as many are led to believe. Pensions should be considered as soon as you get your first job. A pension is a tax-free pot of cash that you put money into, with (where applicable) your employer also having to pay into it. Pensions are created for when you retire from working, granting access to your money in your pension pot (you may be able to access this when you turn 55, taking as much of it out when you need it) to use on living costs such as bills, mortgages, food and any other expenditures you require.

 

So, what does a pension mean to me when I’ve just started a new job?

If you have just started a new job and you are over the age of 22, you will be automatically enrolled into the workplace pension scheme. This means that you and your employer will make monthly contributions to your pension pot. It must be noted that of the April 2019 auto-enrolment minimum contributions have gone up – meaning that employers must contribute 3% and employees must contribute 5%. Since 2018, all employers by law must make contributions to your (as an employee) pension. You have the option to say ‘no’ to a pension auto-enrolment but if you do not do anything, you will automatically be opted-in and pay the monthly contributions. If you are, however, under the age of 22, you must ask your employer to become part of the pension scheme. To be eligible for auto-enrolment you must over 22 years old and must earn over total earnings between £6,136 and £50,000 a year before tax. If you are younger than 22, although you have the right to sign up for the company pension scheme your employer is not required to contribute to it.

 

For more information about pensions, please feel free to follow the links provided below;

https://www.moneysavingexpert.com/savings/discount-pensions/#need-1

https://www.moneyadviceservice.org.uk/en/articles/pension-information-guide-to-the-basic-facts

https://www.gov.uk/search?q=pension

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