Why join a pension scheme?
The biggest risk of not saving is that you won’t have enough money to retire on and do the nice things in life such as holidays.
There is a general pensions industry suggestion that people need to aim for a retirement income of 60 to 65% of their pre-retirement income, including the Basic State Pension.
For example if you earn £30,000 per annum, you need to save enough for a retirement income around £18,000 per annum to maintain your lifestyle.
Everyone who pays National Insurance Contributions is entitled to at least part of the Basic State Pension at retirement, the full rate of which is currently £122.30 per week or New State Pension, whose full rate is £159.55 per week (2017/18 rates).
Even with the reforms that introduced the New State Pension on 6 April 2016, many people will find it hard to live on State pensions alone.
Remember also that the government has been changing State Pension Age. It’s getting later and later, so some people have to wait longer to receive their State Pension.
Pension contributions are a tax efficient way of saving – we will look at how this works later.
There are a number of reasons, including:
