Talk Money Week is here, and this year’s theme, ‘Do One Thing,’ encourages everyone to take a single, impactful step towards improving their finances.
Naturally, as a UK pension provider, we believe one of the most important things you can do is to think – and talk – about your pension. It’s often a good idea to save into a workplace pension and making sure it’s working for you before and during retirement if you want to look after your future self.
Why start a pension?
Retirement might seem like a lifetime away if you’re just starting out in your career and, with the cost of living crisis hitting the nation’s wallets, paying into a pension may seem a secondary concern, but the earlier you start, the larger your pension savings is likely to be. Paying into your pension from a younger age allows you to build retirement savings that will grow over time, benefiting from compound interest. Compound interest means that any returns on your pension savings are reinvested, allowing you to earn even more on those savings year after year. The longer your money is invested, the more potential it has to grow. What’s more, with tax relief and employer contributions, in most circumstances both the government and your employer will add to your pot.
How to start a pension?
One of the simplest ways to start saving for a pension is through a workplace pension. The vast majority of employers in the UK offer pension schemes and will often match a portion of your contributions. If you’re aged between 22 and the State Pension age, are earning more than £10,000 a year and are “ordinarily working” in the UK, you’ll be automatically enrolled into your employer’s workplace pension scheme. If not, you can still ask to join and make voluntary contributions.
Once you’re in a workplace pension, you can check things like your Annual Benefit Statement, which will tell you how much you’re paying in and how much you could have when you retire. If you can afford to, you should consider paying more into it each month.
If you’re self-employed, you can set up a personal pension or a self-invested personal pension (SIPP). While it may feel like a bigger burden to contribute to your pension without an employer match, remember that you still receive tax benefits.
Pay your pension some attention in three easy steps
To make sure your pension is working for you, there are a number things you can do today (read more about these in our ‘three easy steps blog’):
- Find out if you have any lost pension pot savings
- Log into your pension accounts and check your details and your savings
- Picture your future self and how much you’ll need in retirement
Take Action!
Talk Money Week is the perfect time to take control of your financial future. And, by starting a pension, you’re doing one thing that will benefit you for decades to come. If possible, you should strongly consider starting today. Your future self will thank you.
This year we’re supporting the Pay your Pension Some Attention ‘Face Forward campaign’, which has lots more useful information about starting and keeping track of your pension. For more information please visit: www.pensionattention.co.uk
