Since the government introduced the auto enrolment system in 2012, the number of UK employees over the age of 22 who signing onto the pension scheme is ever rising, but there is still a minority of around 15 million adults who haven’t begun their pension savings, but it’s not too late.
So, why save for a pension?
A pension, simply put, is a way of saving your money now to utilise once living in retirement. By taking a fraction of your salary and putting it straight into your pension, you will be allowing yourself reliable monthly increases, and, in some companies, your employer may run a scheme where they are also able to input a cost for your use in later years.
There are a number of ways that can ensure that you receive the most out of your savings by the time you reach retirement, so we have gathered our top tips.
Start saving early
In the UK, as soon as you turn 22 you are able to open and start saving into your pension. By starting your savings early, you can learn to adjust and live without those extra pennies in your pocket at the end of each month. Of course, it may not always be possible to dedicate a section of your salary to your pension from an age as young as 22, but we highly recommend starting as soon as you are able to part with a few pounds. Besides, they are only being saved for yourself at a later date!
Start saving more
Dependant on your age and annual income, you may be able to contribute additional earnings to your pension over time. A beneficial way to do this could be to take any additional pay from bonuses or pay rises and input it straight into your pension fund, allowing you to benefit from the additional pounds but not miss out on any of the salary you have become dependant on. You may also be able to join an auto-enrolment scheme within your workplace. This is a great way to get an additional and helpful boost on your savings as employers are able to contribute a percentage alongside your own savings each month.
Avoid the temptation
When we have money sitting in an account, there is always a level of temptation to dip in for something which, at the time, may be considered vital. However, to get the most out of your pension by the time you reach retirement, you must resist this urge. Remind yourself that what currently exists in your pension fund has taken you years to save for, and so whatever you may take out now could take equally as long – if not longer – to pay back.
Prepare for your retirement
Before reaching retirement, take the time to consider the options available to you. There are many different ways that you could utilise your pension, allowing you to make the most out of your savings. The Money Advice Service has gathered information around how and when to utilise your pension.
Here at Hammonds Chartered Accountants, our professional team are on hand to support you and your businesses. Get in touch with us today, no matter your requirement, and we will be happy to help. Give us a call on 0203 007 4990 or send us an email at.