Home » Workplace Pensions Help Millions Save For Retirement, Here’s How You Can Join Them

Workplace Pensions Help Millions Save For Retirement, Here’s How You Can Join Them

One of your first considerations when you start a new job is ensuring you are enrolled in your employer’s workplace pension scheme. Of course, auto-enrolment means this should happen automatically. However, it’s best to make sure.

A workplace pension comes with the following benefits:

  • Build your retirement savings.
  • Receive contributions from your employer.
  • Boost your savings through tax relief. 

And, remember, all the administration is done for you. Therefore, a workplace pension is hassle-free.

Start Saving Early For Your Retirement

The earlier you start saving for retirement, the more time you’ll have to build up your funds. Maximising your retirement pot means you can enjoy a more comfortable life after you’ve stopped working.

Of course, your retirement may seem far off and not easy to relate to. Also, it can be challenging to understand what lifestyle you want for retirement. That’s why many people find it difficult to start their retirement savings.

In this situation, workplace pensions are invaluable. They provide a means for millions to save for retirement as they progress through their working lives. Planning for your long term future is crucial; when considering your pension, take on expert advice from a specialist such as Portafina.

How Much Do You Pay? 

You contribute approximately 4% of your gross salary to your workplace pension. However, this is the minimum, and you can choose to pay more. 

Your pension contributions qualify for tax relief, boosting them to 5%. Another 3% comes from your employer, bringing your combined contributions to around 8% of your salary’s gross value. 

All of this happens automatically before you receive your monthly pay. Therefore, you don’t have to worry about any administration. 

Giving Your Pension Pot a Boost

You’ve just read that your pension contributions are around 4% of your salary, but you can pay more. Of course, the more you pay into your pension, the more you’ll likely get out of it when it matures. Any additional money you contribute will benefit from years of compound interest growth.

Is Opting Out Possible?

It is possible to opt out of a workplace pension. The question is, why would you want to? The considerable benefits of saving for your future and the hassle-free nature of a workplace pension means you should only consider opting out as a last resort. If you leave your workplace pension scheme, it could severely impact your retirement plans.

Think About Your Future

We’ve mentioned a couple of times that workplace pensions are hassle-free and involve no administration on your part. However, this can result in a detachment from your pension savings and retirement plans.

Why is this? You stop paying into your previous employer’s pension scheme when you change jobs and join your new employer’s plan. As your contributions have ceased, it is easy to forget your old pension. However, the funds you’ve built up could be in jeopardy if you lose track of your pension.

Leaving old pension funds could erode them through high management charges and poor performance. Therefore, when you change employers, ensure you keep track of your old pension. 

Changes to Pension Regulations

Pension schemes are subject to changes in government regulations. A significant change that occurred in 2015 was Pension Freedoms. These changes enabled many people to access their pension funds from age 55. Although this is a significant benefit, it does not apply to all pension schemes. Therefore, you should check your pension eligibility before factoring it into your retirement plans.

Conclusion

Workplace pensions help millions of people save for their retirement. Hopefully, this article will give you the information you need to join them.

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