The Government Department of Work and Pensions tells us that once retirement age is reached, every qualifying British citizen is entitled to the Basic State Pension. This is a regular payment made direct to individuals by the Exchequer, and is designed to act as an income to cover living expenses after retirement. In reality, however, the Basic State Pension is wholly insufficient; at its current level it amounts to a maximum of £97.65 per week.
For many of us who are young and early in employment, retirement age is so far in the future that we simply ignore any need to save for retirement. We’ve heard most of the arguments for saving for retirement, building a pension fund or joining a pension scheme, particularly from older people. But we’re young, there’s a long way to go and plenty of time to think about old age. Later! Perhaps!
Well maybe it’s worth thinking about what we might be missing out on. If we are lucky enough to be offered membership of a pension scheme by our employer and we turn the offer down, we are potentially missing out on ‘free money’ or ‘money for nothing’ – the added money that our employer will put into the pension scheme, additional to and usually more than the amount we contribute from our pay packet.
Maybe we should also think that once the regular payments into a pension scheme are being made, the percentage of gross pay regularly taken is usually so small that in a few months it becomes virtually unnoticeable as a deduction and has little impact on our short-term spending. However, what is also good with pension schemes is that over the years, we find that the amount that has been saved towards our pension fund has grown. Even paying money in to a private pension scheme without employer contributions will create a pension fund that will to grow over time.
Building your own pension with or without your employer is easier on the mind and easier on the purse when in put in place early and in hindsight, later in life, you’ll kick yourself if you miss out now!
If you want to find out more about pension schemes and pension planning, contact one of the team who will be happy to help or forward this eNewsletter to a friend who may benefit from our services.