Tel:+44(0)121 748 4600 Fax:+44(0)121 730 2745 Email: Login Search
The Independent Automotive Aftermarket Federation

Ben news hub latest - Financial Health

Date: 20-Mar-2017

Ben have posted their latest blog on financial health which advises on how to get the most out of pensions.

More and more people in the UK are saving into a pensions scheme than ever before, in line with government advice. In 2015, the Office of National Statistics recorded its highest levels of pension scheme membership since surveys began in 1953.

However, one in ten pensioners admitted to spending a year planning holidays, but only an hour on pension plans according to a survey by Legal and General.

Pensions can seem complex, but there are some simple ways to make sure you get the most out of your savings.

Why save for a pension?

Although will many people qualify for a state pension, this will only cover basic needs (find out about eligibility on the Government’s website). To have the standard of living desired in retirement it’s a good idea to start saving into a pension scheme. Plus, pension schemes will also come with some tax relief, so you’ll put more away for a rainy day than if relying on savings alone.

Start saving early

Even if for someone in their 50s, a good pension pot can still be created, but it’s going to be larger if started at 30 or 40 (or before!).

With a pension pot of £25-30k life expectancy is likely to be one and a half years longer than somebody with £10-15k. The link, which largely reflects the connection between wealth and life expectancy, has been quantified through data held by Equiniti, the UK’s largest pension scheme administrator.

Do the maths

People should consider how much money  they will need to have when retiring. What expenses will be needed to cover each week? Are there any hobbies the person would like to take up or carry on with? Ben has a handy budgeting tool that can help with this.

It’s also a good idea to try and pay off debts before entering retirement. More about this can be found on Ben's 'dealing with debt' blog post.

Then, work out how much of these will be covered by the State Pension. But be aware that this has changed in recent years. More information can be found on MoneySavingExpert’s State Pension pages.

Consider how much is paid in each month into the pension, plus any pots from previous jobs. Also include any savings accounts, ISAs or investments that will contribute towards future income. It is possible to work out likely retirement income on the Money Advice Service’s Pension Calculator and see if you’re on track to achieve your goal.

Put more away

If you get a pay rise or a bonus, consider adding some to your pension pot. There is tax relief on contributions and – on some workplace schemes – the employer may increase their contribution too.

Treasure your final salary pensions

If you are lucky enough to have a final salary pension or defined benefits scheme – one that pays out a set amount each month depending on how long you worked for an organisation – then it’s generally a good idea to keep them. They will offer a guaranteed income and do not come with the financial risk of other schemes.

Avoid the temptation to dip in early

Pensions could be a lifeline in later life, so try to avoid drawing out early, even if while still young. What is taken out could take years to build up again. Anyone struggling financially, is advised to turn to Ben – whose free confidential helpline (08081 311 333) and online chat are open Monday-Friday, 8am-8pm. 

If self-employed

Although the number of self-employed people in the UK is rising, fewer and fewer are saving into pensions. Some plan to sell their business to pay for retirement, but if this doesn’t work out as planned, they can be left without financial security in later life. Others may put it off because of the expense. However, there are schemes in place to help self-employed people save:

As a self-employed person or single person director, you can use the National Employment Savings Trust (Nest). This is a low-cost government pension plan set up to help employers without a workplace scheme. If you are saving for a pension you can claim back some tax relief via your self-assessment tax return. If you’ve forgotten to do this, you can still claim tax relief from the previous three years.

There is plenty of advice on different types of schemes through the Money Advice Service.

If you’re near retirement

For those thinking of retiring soon, it’s a good idea to take the time to think about the options available. The Money Advice Service has information on the different ways you can take your pension. Ben also has a brochure on life after work that gives helpful tips on making the most of your finances.

« Back | News | Top of Page