Unlike an ordinary savings account, pensions go relatively unchecked by their owners. This means that they can seem a bit mysterious and can be ostensible confusing to those who want to know a little bit more about how to save for them.
You should consider staying enrolled by your employer
Think before you untick the ‘automatically enrol’ box when signing up for a new job. After the age of 22, you will be automatically be enrolled into your company’s pension, and this could be invaluable to you. You will also receive tax relief, which is a tax break for pension saving, claimed back from the government. The other stipulation is that you must earn over 10k to start receiving a pension from your employer, and when you combine both your earnings and your employer’s, it will total 8% of your salary every year – that could equate to thousands in the kitty for your retirement.
Don’t just allow the minimum
Once you start regularly contributing, it can be a case of out of sight out of mind- but if you suddenly come into some money, don’t be tempted to just leave it at the bare minimum. Invest where you can, and when you can.
Make sure you’re getting the best deal and advice
Hopefully, this will convince you to enrol in your employer’s pension scheme, and perhaps to invest in your own pension pot. However, it might be wise to enlist the help of a regulated financial advisor, who can show you how bad interest rates and charges to your account will affect your overall pension pot. You can click here to find out more about financial advisors, and what they can offer help on, which includes the following:
- Tax relief: both businesses and personal pension providers claim this back from the government, to save you a little extra cash to put into your pension. A financial advisor can help you ensure you’re receiving the full amount you’re entitled to.
- Multiple pension pots: Multiple employers can equal multiple pension pots.
- The maximum pension limit: This is known as the ‘pension annual allowance,’ and the total is £40,000, which includes both you and your employer’s contributions. Exceeding this can incur a penalty. However, you can ‘carry’ over previous the previous year’s limits if they were never reached.
National Insurance contributions
If you’re considering relying on the State Pension for your retirement, this could be a bad idea, as it may well not be enough to live on. However, you should double check that you can receive the full amount – or at the very least are entitled to. In order to receive the full State Pension, you need to have been making National Insurance contributions for 35 years, with no missed payments. If you’re concerned about this, you can find out more about Portafina’s pension advice serviced via their Facebook page.