Don’t be in the dark about your pension

Retirement might seem a long way off, but it?s never too early to think about your pension. Ideally you should start planning for it from the day you start work. No-one wants to worry about money in their later years, and the way to help prevent that happening is to save regularly into a pension throughout your working life.

Here are some simple but compelling reasons why you should think about pension planning now:

Tax relief. If you make contributions to a pension, or if your employer deducts your payments from your salary, you automatically get 20% tax relief as an additional deposit into your pension pot. If you are a higher-rate taxpayer, you can claim an extra 20%, while those paying additional-rate tax can claim back an extra 25%.

Compound interest. The sooner you start your pension, the longer your money will have to grow. In today?s climate of low interest rates, compound interest and reinvested dividends can play an important part in investment growth.

The state pension is just a safety net. The flatrate state pension amounts to around £8,000 a year. Plus, by 2028, the age at which you can claim it will have risen to 67.

A workplace pension is equivalent to getting a pay rise. If you save into a workplace pension, your employer should make contributions alongside yours, providing a welcome boost to your pension. You get a quarter back, tax free. When you retire, you can take 25% of your pension savings as a tax-free lump sum.

PENSIONS FOR EVERY TYPE OF WORKER

If you?re self-employed, an employee, work part-time, run your own business or have accumulated pension pots with past employers, we can offer you advice. After all, retirement should be an enjoyable and fulfilling stage of life, not a time spent worrying about money.

A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.