Retirement

Everyone needs to plan for their retirement. People are living longer and healthier lives, so it's even more important to think about how and when to save for retirement and how long to continue working.

Pensions can be confusing and many people don't know where to begin, especially when there are so many other things to spend your money on. But the truth is that a pension is one of the most effective ways to save money because you can get tax relief on the money you save in a pension scheme.
So, with a bit of planning, you can do a lot to help yourself get ready for retirement. Fairly small changes now can make a big difference to your life in the future - and you don't need to blow your monthly budget.
This section will help you understand the basic facts you need to know about pensions, including:

• what is available to you from the State when you retire
• some of the financial choices you can make to prepare for your retirement
• where you can go to get more information so you can start planning for your retirement now
• practical and realistic steps you can take to help you save for your retirement

A pension is a source of regular income to live on when you retire and is one of the most effective ways to save money for retirement. This is because you can get get tax relief on the money you save in a pension scheme.

Most pension schemes work in broadly the same way. While you are working, you pay a small part of your wages into the pension fund – or, in the case of the State Pension, you pay National Insurance to the Government directly from your wages. When you have stopped working, or reached State Retirement age, you then receive regular payments based on the amount you have contributed.

Everyone needs money to live on when they retire but few people spend enough time thinking about long-term savings. Because more people are living longer, your retirement could make up as much as a third of your life. So when you do retire, you will still need to pay bills and to have money for making the most of your increased leisure time.

There are a number of different types of pension:

• the State Pension - this is made up of the basic State Pension and the additional State Pension
• Private pensions – these include occupational pensions (also known as work or company pensions) and personal pensions (including stakeholder pensions)

This is a general introduction to the subject of pensions, but please note that it is only a starting point and not a full statement of the law.