Pension. Should I rely just on the State Pension?

Many people perceive pensions to be overcomplicated. However, the basic principle is a simple one.

First of all, it is worth understanding the benefits of saving into a pension scheme and not just relying on the State Pension. The State Pension will provide you with a foundation, but for most of us, it may not be enough to live on.

How much is the State Pension?

Presently  the full new State Pension is for 2026-27 will be  £241.30 per  week. This is probably a lot less than what you planned to retire on or to give you the standard of living you hoped for when you retire.

It should also be highlighted that the maximum state pension amount and is only available to you if you have made full National Insurance (NI) contributions. You generally need at least 35 qualifying years of NI contributions. To find out how much you will get, go to the government’s website, “Your Pension”.

What are my options?

If you are looking for more income in your retirement what are your options? You really only have three choices-

• Delay your retirement
• Start saving more
• Plan for a lower standard of living in retirement.

What are the advantages of saving into a pension?

As the government is encouraging you to save for your retirement, they have given Pensions a number of important advantages over other forms of savings. A good way to look at a pension is just a long-term savings plan with tax relief. Getting tax relief on pensions means some of your money that would have gone to the government as tax goes into your pension instead.

If you save for your retirement through a defined contribution pension scheme your regular savings are invested. This money is invested with the aim that it grows over time. There is no guarantee on what returns you are likely to receive. Your return is linked to the level of risk you are prepared to take and the length of time (term) that the money is invested for. The aim being is to provide you with an income in retirement.

Presently, you can access the money in your pension pot from the age of 55. However, HMRC propose to increase the minimum retirement age from 55 to 57 in 2028, at the point that the State Pension age increases to 67. From then on, the minimum pension age in the tax rules will rise in line with the State Pension age so that it is always ten years below.

Take advantage of your employer.

If you are employed your employer is now required to enrol you into a workplace pension scheme. This is known as automatic enrolment.

If you have access to a workplace pension you should consider taking advantage of it. Staying out is like turning down a pay rise as your employer will also make contributions into your pension plan as well.

Alternatively, if your employer will contribute to your pension regardless of whether you pay into it, then you should join the scheme whatever your financial circumstances.

What happens when I retire?

You can usually take up to 25% of your pension savings as a tax-free lump sum.

If you’ve built up your own pension pot in a defined contribution scheme (as opposed to a salary-related pension scheme) you can then use the rest of your pot as you choose once you reach the age of 55. This is increasing to from age 55 to 57 in 2028.

How Anstee & Co can help you with your Pension.

We are a firm of Independent Financial Advisers (IFA’s). We look at all the financial options that are available to you. The advice we offer in unbiased.

If you are interested in having a comfortable retirement and feel that you should be saving more why not arrange a meeting. The initial fact-finding meeting is at our expense and without obligation. Meetings can be arranged at a time and place that is convenient for you. Why not arrange your appointment today?

Our office is located at-

• Kettering, Northamptonshire

Additionally, we have financial planners that live and make use of meeting rooms in

• Bedford, Bedfordshire
• Market Harborough, Leicestershire
• Northampton, Wellingborough and Thrapston Northamptonshire.

The information contained in this article is for information purposes only and does not constitute advice. No action should be taken based on this information alone. Everyone’s circumstances are different which is why we recommend arranging a meeting with one of our financial advisers.