Securing Your Future After Work or Self Employment
- 16 Sep 2019
There have been a number of new initiatives to help take the burden off the state pension so that people are saving while they work. However, it may be worth considering all of your options before you rely on just the one pension fund or way of saving.
Work Place Pension
It may be surprising to find out that the government began rolling out the workplace pension scheme as far back as 2012. You may not have heard about it until recently because they focused on the largest companies, to begin with. By 2018 every company had an obligation to enrol workers aged between 22 and state pension age into the scheme.
The workplace pension scheme helps people to save for a pension while they are in work. You are required to pay a percentage of your salary, and your employer has to pay in too. The more you pay in, the more your employer pays in. For every new employer that you work for you will need to keep a record of who your pension was held with so you can claim it when you retire.
Although workplace pensions technically fall into the category of private pensions, the other type of private pension is one that you will open and manage yourself. Private pensions can be a great way to top up what you will receive as a state pension and a workplace pension. It may be particularly helpful if you will still have a mortgage or debt to pay after your retirement.
For self-employed people who do not have a workplace pension setting up a private pension is a good idea. Usually the state pension will not be enough to cover bills after you retire and you will need an additional source of income. Setting up a private pension for the first time can be confusing and much like PPI, people have been mis sold private pensions and are therefore eligible to claim compensation for a mis sold pension.
There are a number of bank accounts that you can set up to help with saving for your pension. One of the newest accounts is called the lifetime ISA or the LISA. This LISA account allows you to pay in up to £4,000 every tax year and the government will supplement your savings with a 25% bonus – that's an additional £1,000 every year. You also earn interest on the money that you save.
It’s important to note that any decisions about pensions should be researched thoroughly and that you may want to seek professional financial advice before taking out a pension. Some pensions and accounts are traded on the stock market so could lose value as well as increase in value.