This page is quite old hence its rather spartan appearance.
Why not check out our Latest Stories page for our newest articles or search our site for anything.
COMMENT
Have you got any idea of when and where you would like to retire? Maybe you're too young to think about it yet, but I bet you don't fancy still being in work when you're eighty! Unfortunately, however, working until very late in life for many may turn out to be a reality - because relatively few people will have enough money set aside to adequately retire on. There are a number of ways to provide an income for retirement. The basic State Pension provides an income based on your national insurance contributions during your working lifetime, and those entitled to the maximum currently receive £79.60 a week. The State Second Pension provides an additional income for some people. However, the State Pensions continue to be eroded and so an alternative savings or investment fund seems vital for retirement. Saving into ISAs and other investments are popular ways to provide for retirement. Tax breaks make pensions attractive too, as the taxman will automatically give you a basic rate tax top up – even if you're not even a taxpayer! For those not fortunate enough to be part of a company final salary scheme, some company pensions offer to match some or all of your contributions – which can prove very lucrative too. After all, not only are you planning for your retirement, you're effectively getting free money from your employer too! However, many people aren't saving anything for their retirement – and even companies offering to match some or all contributions can have as much as 97% of their staff not participating in their pension schemes! L&G would like to see legislation requiring all employers to match employee contributions up to an initial level of 3%, which is what it is calling 'soft compulsion'. Eventually, it would like to see matched contributions increased to 6%. Legal & General recently analysed data from its own stakeholder pension fund, which matches employee contributions on a pound for pound basis. There are currently 5,000 members of the L&G pension, or 76% of its employees. They found, unsurprisingly, that employees under thirty tend to be less keen on paying into a pension, perhaps because their first priorities are to get onto the housing ladder. Pensions start to feature from thirty to forty and then die off again at sixty, as employees prefer to use alternative investment vehicles. Percentages of L&G Pension Members' Ages
Age
Take-up rate
Below 30
71%
30 to 40
79%
40 to 45
78%
45 to 50
87%
50 to 60
84%
Above 60
69%
All Ages
76%
Money may be more of an issue when you're under thirty, but this is precisely when you should be saving into your pension, due to the miracle of compound returns. The longer you can save the better, as you earn on interest on your interest! The later you leave it, the less time it has to grow – and the more you'll have to invest!
So, if your employer is offering to match some of your contributions to your company pension – start contributing! And if you don't have access to a company scheme, don't worry, you can still benefit from the tax relief by taking out your own low cost stakeholder pension – and plan for a more relaxing retirement.