Retirement and understanding your pension

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It’s all too easy to start a pension and then forget about it until it comes to retirement. The Pensions Advisory Service created seven top tips for making sure your pension is as healthy as possible.

1) Do the sums

The sooner you can start saving into a pension the longer your savings have to grow. This is important when you work out how much money you are likely to need when you retire.

2) Check your National Insurance Contributions

Don’t take your State Pension for granted. To qualify for the full amount (£175.20 as at April 2020), you need to have made enough qualifying years of National Insurance contributions. It is not the amount you’ve paid that counts, but how many years you’ve paid in.

3) Stay enrolled when your employer enrols you into their workplace scheme

In 2012, the Government introduced a new initiative called automatic enrolment. If you are eligible, your employer has to automatically put you into their workplace pension scheme and help you to contribute towards it. You can leave the scheme at any time if you wish, but if you can stay in the scheme you should seriously consider it. You will benefit from tax-relief on what you put into the scheme and your employer will be putting in money for you too.

4) Save more if you can

If you get a pay rise, or a bonus, or find you can free up some money by spending less somewhere else, think about paying a little more into your pension.

5) It’s never too early or too late to start

Retirement might seem like a lifetime away, but it will benefit you in the long run to save now and spend later. It is never too late or too early to start saving into a pension.

6) Check your annual benefit statement

It is always good to keep track of how your pension is doing – and it’s easy too. Your pension scheme will provide you with an annual benefit statement showing what you are entitled to, based on your contributions to date.

7) Talk to the experts

If you ever have a question about your pension or about pensions in general, speak to the experts. The Pensions Advisory Service guidance is free and impartial.

  • The information provided in this article is for guidance and educational purposes only. Police Credit Union Ltd. does not offer regulated financial advice. Please seek independent financial advice.

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