Do I need to save into a pension?

Think of it another way, can you afford to live on £179.60 per week?

£179.60 per week or £9,339.20 a year is equivalent to the full basic state pension you'll receive when you retire, assuming you have made at least 35 years' worth of National Insurance contributions.

A pension is a long-term savings plan with tax advantages. The primary purpose of a pension is to provide you with an income on top of your state pension when you have retired from working.

If you are currently working you will have access to a workplace pension arrangement. This is a valuable employee benefit because for every payment you make into your workplace pension scheme, your employer will also make a contribution.

Tax advantages:

  • You will also receive tax relief on your pension contributions
  • Your pension savings will benefit from tax-efficient growth on the underlying investments
  • At retirement you will have the option of taking a tax-free lump sum of 25% of the value of your pension fund.  This option is available from the age of 55* even if you are still working.
  • Protected tax-free cash - some schemes have a tax free lump sum greater than 25%. It’s important to check you tax free allowance with your scheme provider before you access your pension benefits or if you are considering a transfer to another provider.  Failure to check could mean you lose your rights to   a tax free lump sum greater than 25%.
  • If you die before the age of 75, your pension can be passed tax-free to your beneficiaries. For this to happen you must complete your Expression of Wish form.

*(changing to age 57 from 6 April 2028)

Check your state pension

Disclaimer

The information, money-saving tips, tools and techniques provided are for guidance purposes only and do not constitute financial advice.

The information, money-saving tips, tools and techniques provided are for guidance purposes only and do not constitute financial advice. Where we provide links to third-party websites we are not responsible for their content. It is therefore important you carry out your own independent research.

If you need financial advice you can locate an adviser on the Personal Finance Society website below.

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