What is a Pension?
A pension is a regular income paid after we retire and leave the world of work behind. It’s usually paid weekly or monthly and, if we have planned properly during our working years, should be enough to allow us to live comfortably in the fashion to which we have become accustomed.
It may all seem a long way off, coming to the end of your working life, when you are probably just setting out on it but unfortunately a pension is something you should consider as early in your working life as possible.
OK, maybe that is a little early for you to be thinking about it personally but many new parents will set up trust funds or savings accounts for their children as soon as they are a twinkle in dad’s eye.
For most of us however, retirement seems a very long way off, but if you sit down with a pension’s expert you will soon realise that if you are going to put money aside for your retirement you need to get started soon – and the more you can put into a pension plan early in life the harder it will work for you over the years.
If you live it the UK you will no doubt have heard of the ‘state pension’. Put very simply, provided you work during your lifetime and pay Tax and National Insurance contributions, you should be entitled to receive a pension from the government when you retire – if it still exists by the time you retire!
The ‘pensions gap’ that they keep going on about on news programmes is all about the population living longer because of advances in medical care and better health education. As a consequence, the government won’t have enough money when the next generation of workers retires to be able to pay them a state pension big enough to provide a decent standard of living and the experts are all considering what we are going to have to do to prevent ourselves from living in abject poverty in the future.
Pensions are really quite complicated so what you need to do is find an expert – an independent financial adviser or a company which specialises in providing pensions advice is the best place to start to get the advice you need.
So don’t put it off. If you don’t have a private pension already (ie not a state pension), go and find out about it. We’re all going to need a way to fund our old age.