From contribution levels to drawing your pension, we answer the most popular pension questions.
Your 30s is likely to be a pivotal time. It’s the time of life that many get married and take other steps to settle down: the average age for a woman to have her first baby is 30, and the average age for buying a first home is 31.
These leaps into adulthood may also prompt you to think about your finances in a more serious way than you ever have before. We’ve delved into the search engine data to find the most common questions that people like you are asking online about pension planning.
How much money should I pay into my pension?
This is a tricky question because it really depends on what you think your income should be at retirement. Consider at least the following:
- balance of your existing pension(s) (you probably have some pension pots from previous jobs)
- number of years left working
- your planned retirement age
- your ideal retirement income
There’s more information about pension contribution levels in our Pensions Explained centre. You can also play with our pension calculator, which can estimate your pension at retirement age based on your current pension balance and contributions. This provides a good basis for calculating how much you should be contributing to reach your target.
How much will I get from my pension?
Your pension income is based on the state pension and your own pension plans, often from multiple employers. When you retire you can choose to treat your pension as a bank account, withdrawing money as it suits you, or to buy an annuity. This way you’ll get a monthly income from your pension.
A better way to look at your pension is to focus on the projected end-value of all your pension pots. There are a lot of pension calculators online that help you to estimate the end-value of all your pensions.
How do I keep an eye on my pension?
If you’re unsure how much you’ve got in your pension pot, or how many pots you’ve paid into, there are different ways to find out:
- pension statement - your provider should send you this once a year
- online - many providers let you track your pension on their website
- contact your pension provider(s)
You may have paid into more than one pension pot. You’ll need to contact each provider separately to find out how much is in each one.
You can let PensionBee do the hard work by telling us where you’ve worked and when, and giving us any pension information you have to hand. We can then locate your old pensions and combine them into a new, online PensionBee plan. Get started.
When will I be able to take money from my pension?
With all the pension changes, it’s now possible to access your pension pots from the age of 55. You can choose to take a lump sump, use your pension a bit like a bank account, or buy an annuity.
However, the state pension is set and paid by the state. If you’re born after 5th April 1977, the retirement age is set at 68. As life expectancy is increasing, it’s likely that the retirement age will continue to rise.
Should I contribute to a pension scheme or should I save into a savings account?
A personal pension offers significant benefits over a standard savings or ISA cash account. As a start, your employer matches your contributions (the mininum amount is 1% until September 2017, rising to 3% in October 2018). The government will contribute too by refunding the income tax you’ve paid on your contribution straight into your pension.
A savings account won’t offer employer contribution and government tax relief, making pension contributions an attractive option to plan for retirement. Interest rates are at an historic low, often failing to keep up with the rate of inflation.