If you have just started, or are about to start, a new job, there is something you must do. Ensure you opt into your employer’s workplace pension scheme. Doing so will get you the following benefits:
- Save for your future.
- Receive employer contributions.
- Qualify for tax relief.
- Have no administrative involvement.
Start your retirement savings early.
Starting your retirement savings as early as possible will give your funds the maximum opportunity to grow. The bigger your retirement fund, the more comfortable your life is when you stop working.
Regardless of your age, the issue arises that retirement can seem a distant place. Also, it is challenging to understand the lifestyle you want when you retire. Therefore, many people struggle to start saving for their retirement. That’s why workplace pension schemes are crucial. They help millions of people save for their retirement throughout their working lives. Money management and planning for the long term financial future is important. Speaking to a specialist and taking on expert advice is helpful. Check out Portafina.
How much is contributed?
You pay around 4% of your gross salary with a workplace pension into your retirement fund. This amount is the minimum, and you can pay more. On top of this, you receive an additional 1% in government tax relief and at least 3% in employer contributions.
Contributions are taken out at source, and all administration is done on your behalf. Therefore, workplace pensions are entirely hassle-free and happen automatically. There is no good reason to opt-out of such a scheme.
Boosting your workplace pension.
As mentioned above, you contribute 4% of your gross salary to your pension scheme. However, you can choose to make higher contributions. There is an obvious benefit to increasing contributions; the more you put in, the more you get out. Also, even small extra payments can grow significantly over your pension’s lifetime, thanks to compound interest.
Should you ever opt-out?
Ideally, no. However, we are aware that life isn’t always straightforward. In some circumstances, the money may not be available to contribute. You should only opt out of your workplace pension as a last resort. Doing so could have a severe impact on your retirement plans.
Consider your future.
Having the administration of your workplace pension taken care of is fantastic. However, it can lead to you becoming detached from your retirement savings.
What often happens with workplace pensions is people lose track of them when they move jobs. That’s because they stop paying into one scheme and start contributing to another. This leads to many people having multiple pensions, some of which can become lost or misplaced.
If you fall into this category, you should relocate your pensions as soon as possible. Poor performance or high management charges could be eroding your retirement funds. If you don’t know about these, you can’t take action to correct them. Therefore, consider your future, and stay in control of your pension schemes.
Government regulatory changes.
Government regulations on pensions can change, and one significant change occurred recently. In 2015, Pension freedoms were introduced, allowing people to access their retirement funds when they reached 55.
These freedoms are not available with all types of pensions. You should be aware of what benefits your specific pension offers. Such awareness will enable you to make changes if or when they are required.
Workplace pensions are an excellent means of saving for your retirement. If you are new to the workforce or are starting a new job, you will likely have to decide to opt in to a workplace pension. Hopefully, this article will give you a safe feeling about doing so.