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It is important you start saving for a pension as soon as you can, even when starting your first job.
Some people make the mistake of believing they can leave saving for a pension until later in life when they near retirement age, however this can cost them dearly in the future.
Find out why saving for a pension is an important financial requirement you start as soon as financially possible:
• The State pension is no longer enough to live off when you hit retirement age and so it is necessary to have another form of income.
• Unless you work for a company that offers Defined Benefit schemes, of who those working in the public sector are typically eligible for, then you will have to save up a pot of money throughout your working career.
• The longer you save and deposit into your pension scheme, the more money you will have to buy an annuity, and the better the annuity you buy the better the pension.
• Defined Contribution schemes are becoming the most wide spread form of pension planning. If your employer offers you one then it is advised you take it.
• Your employer will match the contribution you put into this scheme, to help you save a reasonable pension pot.
• Personal pensions are available for those whose employer does not offer a pension scheme. These are not as good as Defined Contribution pensions as your employer does not contribute, so only opt for this should you not have another form of saving available.
• Those who have personal pensions also have fewer options available to them when it comes to what they invest their money in, so they are less likely to get the best rates.
• Like any savings account, the money in your pension gains interest as it is usually invested into stocks and shares. So the longer you have your money saved this way, and the more you contribute the more interest you can gain.
• Ensure you continually keep up with your pension payments and increase the amount you deposit as your salary grows throughout your career.
• If you do not start saving for your pension early the likelihood is you will have to work longer to gain a substantial amount to live off in retirement.
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