A survey has found that four out of five people do not feel confident that they’re putting enough aside for later life. This equates to some 30.4 million working-age people across the UK, according to the report from the Pensions and Lifetime Savings Association (www.plsa.co.uk).
If you think you might be one of them, here are some tips from Nigel Peaple, director of policy and research at the PLSA, to help with retirement planning.
◆ Enrol in your workplace pension, if you haven’t done so already. Over a third (36 per cent) of people surveyed said their employer matched their pension contribution, and a quarter (26 per cent) had an employer who paid in more than they did. With tax breaks and investment growth, the money will go further than you think.
◆ Make use of the support available when you approach retirement. Pension Wise is a free government guidance service offered to people aged over 50 to help them understand the different options available at retirement (https://www.pensionwise.gov.uk/en).
◆ Don’t assume that the amount you are saving into a workplace pension is enough. The minimum workplace pension contribution level is currently 5 per cent, increasing to 8 per cent next year, and half (51 per cent) of people surveyed wrongly think this minimum is the “recommended amount”.
◆ Consider whether you could be saving more for your retirement. A third (34 per cent) of people said they could afford to save more towards their pension – increasing to 42 per cent of millennials.
◆ Don’t ignore your annual statement from your pension provider. It’s important to read your statements and consider whether you need to take any action as a result, for example, updating your expected retirement age or consolidating different pension pots into one with lower charges.
◆ Consider regulated financial advice. An independent financial adviser could help you get the right product or products to suit your needs and help your money go further.
◆ Don’t be afraid to ask questions. If you need to know more about such issues as charges or your investments, your scheme provider will be able to help. The Pensions Advisory Service can also offer free, independent information and guidance on pension matters.
◆ Spend time thinking about how you want to access your money in the lead-up to retirement. Only a third (31 per cent) are confident they understand all the options available. Deciding what to do with pension savings is a very complex decision and sometimes you only have one chance to get it right, so it’s important to dedicate some time to retirement planning.
◆ Don’t fall into a scammer’s trap. Be wary if a company approaches you out of the blue – whether over the phone, by email, or in person – and make claims of high returns with low risk, or tax loopholes. If it sounds too good to be true, it usually is.
Pocket money sets an example by overturning gender pay gap
Girls typically receive more pocket money than boys, reversing a gender gap which has been seen for over a decade, the new Halifax Pocket Money survey has found. On average, girls receive £7.09 a week, according to the report, while boys typically receive 18p per week less – £6.91. It’s the first time since 2006 that the report has found girls are receiving more pocket money than boys.
Hope for first-time buyers as their numbers outstrip movers
The proportion of first-time buyers snapping up homes has overtaken the number of existing home-owners moving house for the first time since 1995, analysis has found.
Across the UK, there were 170,000 home-movers in the first half of 2018, compared with 175,500 first-time buyers, according to the Lloyds Bank Homemover Review, which only looked at properties bought with a mortgage. It was the first six-month period when the proportion of first-time buyers had been higher than home-movers since the first half of 1995.
One in ten taking pension in one lump sum face tax penalty
One in ten people retiring this year expect to withdraw their entire pension savings pot as a single lump sum, a survey has found. This could cause a shock tax bill for some, according to Prudential, which made the findings. The pension freedoms introduced in 2015, give over-55s with defined contribution (DC) savings pots a wider range of choices over how they use their money, including being able to withdraw all of it, some of it, or to leave it invested. Generally, the first 25 per cent of money taken out is tax-free and the remainder is subject to tax.