Even if money’s tight, paying into a pension is still a highly valuable way to use your cash if you want to have the best shot at carving out the retirement you’d like for yourself and your family.
Here are 10 reasons why it's a good idea to stay enrolled in your new workplace pension.
1. You’ll get extra money for retirement
Saving on your own would take your pension much longer to grow, but with a workplace pension there are two more payments going into the pot on top of your own: extra money put in by both your employer and the government as tax relief*.
For an idea of how much your employer will pay into your pension pot, try our pension contributions calculator.
Or download the free ‘Saveasyougo’ app to find out the minimum your employer has to pay into your workplace pension.
If you have an iPhone, type ‘Saveasyougo’ into the search in the App Store on iTunes, or if you are looking at this site on your phone, download the app here.
If you have an Android phone, type ‘Saveasyougo’ into the search in the Android Apps shop in Google Play, or if you are looking at this site on your phone, download the app here.
For exact amounts, please speak to your employer or pension provider.
2. It’s an easy way to save-as-you-go
Once you’re enrolled in a workplace pension, you’ll be saving as you earn, giving your pension pot time to steadily grow. The money will be taken at regular intervals straight from your pay packet and put into the scheme automatically. So it’s essentially just being transferred from one place to another – and stored up to spend in your later life.
3. You’ll get more than just the minimum
Life is for living and we all love a few treats, so a workplace pension is a great way to make sure you’ve got enough to pay for those little extras when you retire. The minimum you’ll receive is the State Pension, which in 2013/14 stands at £110.15 a week for the full basic amount, for a single person. A workplace pension makes sure you’re putting more money aside for your future, with the minimum of hassle.
4. It’s a hassle free way of saving
You don’t need to do a thing – your employer will automatically enrol you into a workplace pension and take care of all the paperwork for you. When the time is near, your boss will write to you with all the information you need.
5. Millions of people are doing it
Millions of workers will be enrolled in a workplace pension without having to lift a finger. When the time comes, your employer will let you know more. It applies if you’re 22 and over (and under State Pension age), earn more than £9,440 a year (tax year 2013-2014), aren’t already in a qualifying pension scheme, and you work or usually work in the UK.
6. Most people will get back more than they put in
Realistically we all know that pensions can go up as well as down, but analysis suggests that for over 95 per cent that improvement is greater than the cost of the contribution, even after allowing for inflation. For over 70 per cent the expected improvement is more than twice what they put in.
7. It’s never too late to start
Unless you're just a few months from retirement, its not too late to start putting away cash for your future. The vast majority of people will get back more money than they put in, as they aren’t the only ones who are contributing.
8. Once it's done it's done
Pension saving can be something you don't get around to sorting out quickly. So when the time comes you'll be automatically enrolled, which gives you one less thing to worry about. And you'll have made a good solid decision that will help secure a healthy financial future.
9. Changing jobs? You can take it with you
The money saved in your pension is yours to keep, even if you change jobs. You don’t have to give it back and you’ll still be able to access it when you retire. You may even be able to combine it with your new employer’s scheme.
10. You’re always in control
You don’t have to take up a workplace pension. You’re free to opt out at any time, but it’s worth remembering that if you do, you’ll lose out on the employer contribution and government tax relief*.
If you opt out (or decide to stop paying into your workplace pension), you’ll be given more chances to join again later. Your employer has a duty to automatically enrol you back into the scheme at regular intervals, usually every three years.
For more information about workplace pensions visit www.gov.uk/workplacepensions
* Tax relief means the money that would have gone to the government as income tax goes into your pension instead.