Why Is Pension Planning So Important

Why Is Pension Planning So Important? | Find Out Here

Many people, particularly those who are a long way from retirement, fail to see the importance of planning ahead. For those who have just left university, or started a new job, thoughts of retirement are pushed behind thoughts of next year's holiday, or putting a down-payment on a new car. With house prices high, and a competitive job market in many sectors, people find it difficult to find enough spare cash to start saving, let alone putting enough money into a pension plan.

Why Is It Important To Plan For Your Retirement?

Pension planning is key to a comfortable retirement. Let's look at some retirement facts:

• The Department of Work and Pensions' statistics show that there is a steady increase in the number of people in the workforce who are over 50.
• Improved medical and educational prospects are increasing our lifespan. It's possible that people who retire at 50 could have to fund their retirement for over 40 years - longer than they were at work in the first place.
• In the future, the number of people able to work will decline, whilst the number of pensioners will increase. This could cause a shortfall in the state pension system.
• It's impossible to predict what future governments will do to the state pension system. We can no longer rely solely on state support when we retire.
• Women statistically live longer than men and need to provide for a longer retirement.

The simplest way to kick-start your pension planning is to join your company pension scheme. Pay in as much as you can - your contributions are deducted at source from your salary, and are subject to tax relief at whatever rate you pay income tax. Company pension schemes are usually very good, with benefit levels that you probably won't find with a personal plan. Your employer may also make a contribution to your plan and, if you are lucky enough to work for an employer that uses its pension scheme as a staff incentive, this could be 10% or more of your salary every month, which makes a big difference to your fund.

If you regularly move jobs, work as a contractor or if you are self-employed, then consider starting a personal pension plan. This will allow you to continue paying into the plan no matter where you are working and, if you are on a long-term contract, you may even be able to negotiate with your employer so that they pay a contribution to your personal scheme.

Good pension planning starts with speaking to an expert. At Pension Transfers we have a panel of experienced pension advisors who can talk to you about starting a pension plan or advise on your pension transfer. Our panel is regulated by the FSA, and would be more than happy to talk through your concerns or plans for retirement.