Pensions are the UK’s taking on employer- and government-sponsored retirement packages. They’re an attempt to make sure that every worker is taken care of during a time in life when income and health may be waning. For people in the UK who are unfamiliar with the inner workings of their pension, or from people from other countries now working within a realm of British industry, it can be helpful to review just exactly what a pension is.
A pension is a pool of money that gets filled up from three sources: your paycheck, your employer’s contributions, and the federal government’s tax relief credit. Depending on where you work, your employer might match your funds pound for pound, with the government contributing about 20% in terms of tax credit. For the sake of understanding, we’ll use round numbers. You contribute 40 pounds monthly from your salary, your employer matches, and the government contributes 20 pounds in tax savings: 100 pounds every month in total.
When it comes time to retire, you’ll start drawing on these monies which you’ve been saving up (ideally) from many decades in your career or series of careers. No matter your health or financial situation at the time of your retirement, you are entitled to these funds and they will trickle into your life steadily, helping you along with whatever other savings or wealth you have.
Now that you understand the basics of the British workplace pension system, it’s important to think about some of the common confusions of this system, and how these are best resolved. Many workers don’t understand how their personal pension is organized. Personal pensions rarely use nice round numbers like we used in the example above. To further complicate matters, you may have multiple pension agreements that are active, having worked for multiple employers over the length of your career. This can make it very difficult to know that you will be getting your due when it comes time to start drawing upon the pension funds you have saved.
It can be helpful to get an independent company to review the specifics of your pension. In many cases, mistakes are made, resulting in the individual not having access to the deserved funds. In other cases, outright fraud is discovered, which would go on to rob a retired person of their hard-earned benefits during a vulnerable period in their life.
It is important to find a qualified and reputable pension review service, like the one linked. It is also important to begin the pension review process before your pension kicks in. This will allow you plenty of time to work out the kinks in your own pension agreement. Some people even get their pensions reviewed early in a career, to ensure that the money that is contributed from all parties is the most that it can possibly be. Because pension regulations are ever-changing, most employees will not be up to date on their regulations. Hire a great pension review company to make sure that your pension is acting as it should.
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