Posted on: 17th Oct 2018
This question may seem a little odd, but there are a few people who doubt the potential of a. This week, we are highlighting the many ways in which saving into a pension can benefit your future. From simplicity to investments, we explain everything you will need to know.
You can maximise your workplace pension to claim all the money you have earned
Having a pension can be a wonderful way to save while staying tax-efficient. If you have the option of a workplace pension scheme, your employer will also be contributing towards your future. Many people have started being automatically enrolled into their workplace pension scheme. In fact, there are more than 9.5 million people in the UK who have one with their employer.
If you are already one of them, you will benefit from the contributions made by your employer into your pot. This is a minimum of 2 per cent of your salary while you contribute 3 per cent. However, you may not currently be in your workplace pension scheme or making the most of your entitlements. If this is the case, you are effectively passing up on money for your future. This is not something most of us would often do.
It is simple to get into the habit of saving
Once you are part of your workplace pension, staying in the habit of saving could not be easier. This is because these payments come straight out of your salary. This means that the money is not building up in your bank and tempting you to spend it. The money in your bank account will not get as much interest either. This is due to low savings rates and inflation. What’s more, if you up your pension contributions by just a small amount, your pension pot could come with greater benefits in the long-run.
If you can take a few extra steps now, your future self will be grateful. It is increasingly unlikely that you can rely solely on the State below the annual salary of the minimum wage. What’s more, the age when you can claim it is on the rise. By the time you are eligible to receive it, you could be in your late 60’s.to if you want to live comfortably when you retire. The basic State Pension is
Allow your money time to grow
The wonderful thing about a pension is that any money that is invested by you and your employer has the chance to grow. However, please be aware that a pension is an. Not only can it go up, but it can also go back down. This means that you could get back less than you have paid in. Where you choose to invest could also make a big difference to your future lifestyle. When it comes to choosing and reviewing these investments, you will want to carefully consider how involved you would like to be. You will also need to think about how much risk you would want to take, as well as other things.
Tax relief: the secret weapon to your pension
You may not have to invest as much as you would expect if you want to make a big impact on the future of your pension. This is due to the tax breaks on the payments that you will pay into your pension.
These tend to be at the highest rate of income tax that you pay. This means that saving £100 into your pension pot normally costs you £80, or £60 if you are a higher rate taxpayer. Please be aware that higher rate taxpayers may need t claim back anything above the basic rate direct from HMRC. This may differ slightly for Scottish residents as the tax rates in Scotland differ from the rest of the UK.
Pension freedoms give choice
When the time comes for you to take your life savings, pension freedoms mean that you may now have more choice and flexibility. It is entirely up to you when and how you take your money. However. Not allwill offer these options. You need to make sure that you have chosen the right pension for you.
Pension savings can pass to your children or other loved ones. This can sometimes happen tax-free and without inheritance tax as pensions aren’t usually included in this. Make sure you keep your provider up to date with who your beneficiaries are by keeping your beneficiary nomination form updated. Your pension is not usually covered by your Will. It is especially important after major life events such as divorce.
This is only the beginning
We have only told you a few examples regarding the potential of your pension. To learn more about how you can pay into your pension for a better future, then look no further. Get in touch to find out more.are here to guide you will all of your options, ensuring you an enjoyable when the time comes.