More than office talk!
Now, you will probably have heard the word pensions flaunted around the office occasionally. If you are a 20 something graduate working in an office participating in the everyday light conversation, you can easily be forced to slip out of the conversation because you haven’t got a clue what your co-workers are talking about. Well obviously if you have just finished university, you have your whole working life ahead of you. So you put this to the back of your mind. Well in fact, pensions are geared to making a nice retirement life. I felt that I did not want to be left out the office conversation when chit chat turned to a more financial topic, so I obviously had my myths to what benefits pensions offered. This small guide will help you get up to speed and keep up with the office gossip. Sooner or later, you will be the one who will be making the financial chit chat in the office.
Do I need a pension and when?
If you have been recently thinking about the future of your money, then you are one step ahead. Thinking about a pension early is crucial to investing a manageable monthly sum. The information I have collated are just some tips I put together as few important statements to help others understand the basics of pensions. Let you be in the driving seat with your money making decisions.
There is a stereotype answer that appears in a conversation with millennium generation when discussing pensions. It is often a story of pensions as something their elderly relatives collected every week at the post office. Most of us think we know what a pension is but what is it we know are true and which are myths?
The jury’s out and I have decided to lay down all the common myths and reveal the true facts of pensions.
Cited from The Institute of Fiscal Studies, I thought I would point out some interesting facts.
- 7.5 million of us like to save and are good at meeting short term goals
- 3.8 million of us describe themselves as frivolous
- Over 900,000 women are in work over the age of 60, with half of the number of men over 60 now in work.
The real pension facts
1.-What does pension mean?
Myth – it is short for pensioner.
Truth - Pension is simply a fixed sum paid in regularly by a person to a pension provider.
2.-What is the difference between a state and private pension?
Myth- If you have a state and private pension, you will get taxed more by the taxman.
Truth- The days of a state pension are long gone. You will only begin to start claiming a state pension at the age of 65. If you start a private pension, depending on what you decide to choose you can use your private pension from 50-75. Be sure to check the guidelines as you can be charged a penalty if you wish to opt out earlier and lose your overall income of up to 50%. The key tip is to not assume that all pensions are the same.
3.-What types of pensions are available for me to choose from?
Myth- It depends which one you go to
Truth- Look out for ones where you can take out up to 25% tax free cash sum when you retire.
4.-You can only have one pension
Truth – False. If you have worked for 30 years or more, you will get your state pension at possibly 65 or 67 if you reach retirement age after by 2028. It is no longer possible to have a state pension. The earlier you start to think about investing in a private pension the better chance you have to living comfortably.
5.-It’s not worth saving into a pension
Truth – False. Most people can expect to get more out of their pension than they got out of it.
6.-I can only put a small amount into a pension so it isn’t worth it.
Truth – False. Your contribution will be a percentage of your final salary. You will also be entitled to get a tax relief from the government too. Tax relief means some of your money that would have been income tax goes into your workplace pension instead.
I am a 20 something graduate who has just stepped onto the career ladder. I visited the Pension Bureau where I learnt that there was a lot more information out there then I realised. I was given an advisor to help me. I was put in touch with a firm who could help me to prepare for a private pension for young starters.