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Too Young to think about a pension – Think Again

Your retirement years may feel like a lifetime away – and for many graduates and young professionals that literally might be the case – but thinking about your pension now and committing money to it every month will substantially increase the ‘pot of money’ you will receive at the point of retirement.

Due to medical advances, and better nutrition, people are now living longer, and although the retirement age may rise again, people will need more money for their inevitably longer retirement. This shouldn’t be scary, as there are many benefits to starting a pension at a relatively younger age.

A fantastic advantage of being part of a workplace pension scheme (that your future-self might thank you for!) is that you are taking control of your future and not relying on the State Pension. The basic State Pension is a regular payment from the government that you can receive, once you have reached State Pension age. As long as you have 35 years of National Insurance contributions, you are entitled to the full State Pension, but it is almost impossible to predict the ‘state’ of state pensions in 50 years from now. Will it exist as we know it? Currently, the State Pension is £159.55 a week or £8,296.60 a year. (Gov UK, February 2018) https://www.gov.uk/state-pension. With inflation and longer retirement, will this be enough to see you through retirement?

Education, on all money matters including pensions, is key for younger generations to make informed decisions. If you start a new job your employer should make you aware of their pension scheme. Companies now by law have to set up auto-enrolment pensions. For example, your company will contribute to your pension – say 3% of your salary – and you can then match it. Although employees can choose to opt out, you probably shouldn’t. If you opt-out you are simply turning down free money from your employer. It's almost like having a tax-free pay rise, as payments into a pension qualify for tax relief.

If you would like to discuss workplace pensions or any aspect of retirement planning with us, or if you're looking to review or increase the benefits that you offer your employees, get in touch with us on 01302 244 977

Publish date: 19th February 2018

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