Pension tools and resources
Understanding pensions can be tricky to tackle. There are many different types and pension terminology can be difficult to understand if you’ve never encountered it before. Whether you’re approaching the age of retirement or not, a pension is something you should at least be thinking about.
It’s also important you’re equipped with the tools and resources to understand how much you’ll be entitled to once you stop working – and how that’s calculated.
While we should all save money for rainy days, a pension is the best way to ensure you have regular income when you stop working.
What types of pensions are there?
In the UK, there are multiple types of pensions to choose from. The most commonly known are those set up by your employer, often referred to as a workplace pension, and one arranged by the Government, which is a fixed amount called a state pension.
How much you receive from a workplace pension depends on the type of scheme the company you work for offers, the amount you pay into it and the contributions made by your employer.
The amount of basic state pension you receive from the Government depends on whether you’ve reached the state pension age before (£122.30 per week) or after 6 April 2016 (£159.55 per week). These amounts are accurate as of December 2017 and can change depending on your National Insurance contributions and credits.
The state pension age has continued to increase over the years, and Age UK has a useful online tool and advice on how this might affect you.
Picking the right pension product
Picking the right pension product is important, as it will determine how your money is invested and what kind of return you can expect. Citizen’s Advice has a guide on choosing a personal pension which includes a selection of useful tips to use before you browse pensions products.
When it comes to choosing a pension, it’s also important to keep an eye out for scams. These are fraudulent investments that can appear quite convincing. For more information on scams, you can visit the Pensionwise website or use this tool from the Pensions Advisory Service that asks a series of questions to help you understand whether you’ve been the victim of a scam.
You can read more about how safe your money is in this Money Saving Expert Guide that outlines what protections guarantee investments made into pensions funds.
Calculating your pension now
It’s always a good idea to have an estimate of much you’ll be receiving in retirement in order to fund the lifestyle you want for you and your family.
You may want to travel the world, set up your own business or just have the knowledge that you won’t have to worry about money later in life.
No matter what your plans, you can get a handle on how much your pension will be with The Money Advice Service’s pension calculator and make any adjustments while you’re still working or under the State Pension age.
Combining pensions schemes
If you’re lucky enough to have had only one job in your life then sorting out your pension could be fairly straightforward. However, the chances are that you would have had at least a few jobs and over the years may have signed up to more than one pension plan.
You can look into combining them into one scheme, which can simplify things and help cut down on paperwork. The Pensions Advisory Service has a lot of useful guidance and information on what options you have with your pension under different circumstances. You should also make sure that combining your pensions is the best option financially, as consolidation may incur fees or reduce your rate of growth.
If you’ve thinking about changing jobs or moving abroad, you can get more information about transferring your pension from one scheme to another with this Equifax guide.
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