It pays to get your pension sorted early
Indeed, at the start of your working career, your pension may not be exactly at the top of your priority list. However, it is a fact that the earlier you can start saving towards your pension, the higher the amount you can expect your retirement income to be. And, although it may seem like a hassle, your pension is a long term investment designed to support you post-employment. It therefore makes sense to find out about how to make yours as lucrative as possible.
A recent study has suggested that not enough people are saving sufficient funds to ensure their well-being after retirement. And one of the best ways to start saving for your pension is to join a company pension scheme with your place of work. There are generally two types available to employees: salary related pensions and money purchase schemes.
The amount you receive with a salary related pension - usually referred to as a final salary scheme - is directly related to your pay, as well as the number of years you have been in the plan. Members contribute to the scheme on a regular basis, having already ascertained the level of pension they can expect to receive.
In addition to your earnings preceding your retirement, you will also earn money based on the accrual rate, which is calculated on your salary received for each year you're in employment. And, don't worry if you decide to leave your position with one company. In reality, you can either become a deferred member or transfer your scheme onto another one. It is wise however, to speak with an independent advisor to ascertain the best option for your circumstances, before you make a decision.
The second type of pension available - which is more popular than the first - is the money purchase, or defined contribution scheme. Here, both employees and employers contribute to the pension, but instead of going into a fund, the money is invested.
The final amount you will receive, therefore, will depend on how well the investment went and the amount paid into the scheme. This type of pension is generally more flexible than the salary related ones and can be better for those who regularly change employers.
But regardless of which company pension scheme you go for, it is vital to remember the importance of having one. It may not be fun to have to think about it now, but as a long-term investment, your pension is one of the best things you can do to ensure your financial security after employment.
A recent study has suggested that not enough people are saving sufficient funds to ensure their well-being after retirement. And one of the best ways to start saving for your pension is to join a company pension scheme with your place of work. There are generally two types available to employees: salary related pensions and money purchase schemes.
The amount you receive with a salary related pension - usually referred to as a final salary scheme - is directly related to your pay, as well as the number of years you have been in the plan. Members contribute to the scheme on a regular basis, having already ascertained the level of pension they can expect to receive.
In addition to your earnings preceding your retirement, you will also earn money based on the accrual rate, which is calculated on your salary received for each year you're in employment. And, don't worry if you decide to leave your position with one company. In reality, you can either become a deferred member or transfer your scheme onto another one. It is wise however, to speak with an independent advisor to ascertain the best option for your circumstances, before you make a decision.
The second type of pension available - which is more popular than the first - is the money purchase, or defined contribution scheme. Here, both employees and employers contribute to the pension, but instead of going into a fund, the money is invested.
The final amount you will receive, therefore, will depend on how well the investment went and the amount paid into the scheme. This type of pension is generally more flexible than the salary related ones and can be better for those who regularly change employers.
But regardless of which company pension scheme you go for, it is vital to remember the importance of having one. It may not be fun to have to think about it now, but as a long-term investment, your pension is one of the best things you can do to ensure your financial security after employment.
