It seems a funny thing to think of retirement at my age. I am in the fledgling stages of a career and still finding my way in the world and yet I find myself in the situation where I now have to think what will happen in the next forty odd years when I retire. It is easy to be complacent and think well I don’t need to worry about retirement now; I have years yet to save up. Well yes you do have years yet until you retire and plenty of time to save but the sooner you start saving the better off in the long run you’ll be.
In the UK you are entitled to a basic state pension (BSP) based on your national insurance contributions, you need 30 years of contributions to be entitled to the full BSP. You can only claim BSP when you reach your retirement age. However you will find that for the majority of people a state pension is not enough to live off by itself.
In October 2012 the UK government rolled out the auto-enrolment pension scheme requiring employers to automatically register their employees into a pension scheme. The aim of the scheme is to encourage people to think about what will happen when they retire and to make adequate preparations. The scheme does not affect all employers yet as it is taking effect over a number of years so if you are starting a new job or currently employed and your employer does not yet offer a work based pension scheme it might be worth checking out with the HR/accounts department when this may be happening. The Money Advice Service offer a great pensions calculator that can provide an estimate on the amount of money you need to be saving a month in order to have a certain amount of savings at retirement.
Where do I start?
- Assess if your workplace has a pensions scheme available
- If so, find out more from the HR department about the scheme and how to enrol
- If your workplace does not offer a pension scheme, find out if they will contribute into a pension scheme
- Get free Independent Financial Advice (IFA) - if you Google "Free Independent Financial Advisors" you will find many websites that allow you to sign up for free where an IFA can then call you back and discuss with yourself about the pension options. If you are starting from scratch like me then it's a great way of getting free advice on the pension schemes you may be eligible for, how to enrol, and where to look for further advice. Unfortunately for any further information about what scheme they may advise for yourself you would need to make a payment.
The Money Helper, previously known as the Money Advice Service - https://www.moneyhelper.org.uk/en - is recommended by an IFA and contains lots of useful tools and resources. Here you can also book a free Pension Wise appointment. Pension Wise is a free government service that offers free, impartial guidance. It outlines the options for people with defined contribution pensions.
Gov.UK - https://www.gov.uk – informative and to the point, this website provides advice directly from the UK government providing an overview of the different pension schemes.
Which - http://www.which.co.uk/ - provides independent advice for the consumer.
Where I’m at . . .
...so far I have contacted a number of IFAs to gather some background information on where to begin when it comes to choosing a pension scheme. It seems like a massive undertaking but the sooner it’s organised the better. The next step is to assess the type of pension scheme I should choose in collaboration with my employer. Remember to always seek independent advice where you can, it helps to have a professional opinion of where to best invest your money for your future.