Pensions are the basic building blocks of retirement income in the U.K., but how can you ensure that you will have enough money when you retire? By planning ahead, you can ensure that you have enough pension money coming in to have a comfortable retirement.
You should never depend solely on State Pension payments. Most people need more than just the State Pension when they retire.
Estimating your State Pension Payments
One of the first things you should do when planning for retirement is check estimates for your State Pension payments. The easiest way to do this is by using the government’s online tool here. It will show you how much your payments will probably be, when you can start receiving them, and whether it’s possible to increase them.
However, you won’t be able to use the tool if you’re already receiving your State Pension or if you have deferred payments. Additionally, if you will hit your State Pension age in over 30 days, you can also fill out the BR19 application and mail it in. You can also call the Future Pension Centre to get your forecast.
The current law for the State Pension age will increase it to 68 between 2044 and 2046. However, the government plans to move that timetable forward, increasing the State Pension age to 68 between 2037 and 2039. Be sure to keep the changing law in mind when reviewing your retirement plans.
Private pension schemes
In addition to the State Pension, employers also offer their own private pension schemes. You can contribute to as many pensions as you want. Other options include personal or stakeholder pensions.
Employers must automatically enrol their employees in workplace pension schemes if they are at least 22 years old, under the State Pension age, and earning over £10,000 per year. Some employers contribute to their employees’ workplace pensions on top of what the workers themselves contribute. In some cases, workers can also make additional payments to increase their pensions.
Personal or stakeholder pensions are a good option for some U.K. residents. They can help you save extra money to use in retirement or increase your retirement savings on top of what your workplace pension will pay when you retire. Self-employed individuals may want to have a personal or stakeholder pension because they don’t have a workplace pension. Additionally, those who aren’t working but can afford to pay into a pension scheme may wish to have one.
If you’ve lost a pension that you’ve paid into, you might want to use the Pension Tracing Service to be able to trace it. No matter how close you are to retirement, you must be thinking about how you will afford to pay expenses when you finally reach the finish line.