The thought of managing your pensions can seem daunting, and the fact that some won’t be needing it for decades to come, can make it easy to brush under the rug. But although it may provide a great foundation, your State Pension may not be enough to live on, so getting these savings in place for your future now, can help towards guaranteeing a stress-free retirement!
Luckily, the savings are not all down to you!
The law requires every employer to automatically enrol workers into a workplace pension scheme if they:
- are aged at least 22 but are under state pension age;
- earn at least £10,000 a year; and
- work or normally work in the UK
In doing so, your employer will consequently make additional contributions (as well as you!) to your pension pot, whilst the government will also provide a small bonus in the form of a tax relief.
Currently statutory minimum contribution rates on qualifying earnings are:
- Employee: 4%
- Employer: 3%
- Government: 1% tax relief
So in simple terms - if you earn £2500 per month,
- You will sacrifice £100
- Your company will donate £75
- And the government will add £20 from what it would have taken from your tax
So a total of £195 per month will go into your pension pot!
The most popular pension provider in the temporary employment market is NEST, but there are plenty of others available – plus, your pension should be portable, so you’ll be able to take your pension from employer to employer.
If you work as self-employed, you are not entitled to be enrolled in a workplace pension, however there are many pension providers available who specialise in pensions for freelancers and the self-employed. The Pensions Advisory Service also has plenty of information about pensions for the self-employed.