There are many of us that do not have a pension, or only have a government pension and might be thinking about getting one. There are lots of companies out there that offer pensions and it can be difficult to know what to do when it comes to buying the pension. It is good to consider it for a while as it could make a big impact on your retirement. It is worth thinking about the fact that we could be retired a long time and once we retire, it may be hard for us to earn extra money so we will be relying on our pension as an income. This is why it is so important to make sure that you make the right decision.
The government pension does not pay a huge income, but it is worth doing. For the amount of money that you have to pay in, you will find that you will get a lot out. If you are employed then you will be paying in through your PAYE but if you have not always been employed full time or you are self employed then you may not have paid enough in. If you do a self assessment tax return you can make voluntary contributions to your pension even if you do not earn enough to have to pay in and it can be a good idea to do this. You can do one of these tax returns even if you are employed not self-employed and you should be able to volunteer to make the payments. You can check first online on gov.uk to see how much you have already paid in and how many years you need to pay in to qualify for a full pension from the government.
If you have a job, then your company may allow you to use their pension scheme. Companies that have more than a few employees have to make a pension scheme available for their staff. This means that there is likely to be one that you can join. If you are not a full-time employee you may not be able to join it, but it is worth enquiring anyway. The big advantage of a company pension is that the company will normally pay in some money as well. This means that your pension pot will be a lot bigger compared to the size it would be if you were the only person that was paying in to it. This means that you will potentially get bigger payments when you retire.
A personal pension will not have the advantage that a company pension does of the employer being able to pay into it. However, it does enable you to regularly put money away for retirement. You will have to pay in a certain amount each month so it will force you to do that. This will mean that you will not be in the situation where you struggle to remember to put money away for retirement or that you retire and do not have any pension due to you.
Some people do not like the idea of pensions though. They are not keen on the idea that they are paying in a lot of money during their lifetime and if they have a very short retirement they will not benefit from it for long. It can be the case that if your spouse outlives you, they will be able to have a portion of pension paid to them. However, if neither of you claim for long, you may have paid in far more than you get out. Therefore, some people may prefer to put their money into other things, so if they do not use it in retirement, their children will inherit the lump sum and they will be able to use it instead.