Why you need a pension

Men: you're looking at an average retirement of 16 years.

Women: yours will be an average retirement of 26 years. At least.

That's last year's statistics and we're living longer all the time

The State only helps if you're happy to live on £80 a week or so. If you want to be warm, well fed and need a reasonable income then a pension is normally the best way of saving for retirement.

You get major tax benefits and can enjoy the magic of compound interest.

Let's put it this way. Say you're 65 Today and had started saving £50 a month when you were 20. If you'd put it under the mattress you'd now have £27,000.

But if you'd put it in a pension and it had grown at 9% pa (the average stock market growth for the past 80 years has been 8%) it could now be worth a whopping £314,000...(NB this doesn't include cost of charges but demonmstrates the effect of compound interest).

But you have to do it soon.

The younger you start the better. It'll be much cheaper for you and you should end up with a lot more money. Every month you wait can make a significant difference (see the cost of delaying and / or savings calculator).

If you're lucky you will get a pension soon. If you're normal you'll leave it till later and later, maybe till you're one of those sad old people who can't afford heating and freeze to death during a cold snap.

Top

Oh fcuk. How do I get one.

The new Stakeholder pension is a simple, cheap and flexible type of pension which was designed to improve things for the public.

It is probably the best buy for most people.

Before it's introduction in 2001, in the bad old days of high charging, inflexible pensions, we used to encourage people to see an IFA to help steer you through the minefield.

IFAs don't really make enough money from Stakeholders to bother dealing with them - unless you're paying a fee. However personal finance is always dangerous ground so it may be a good idea to consult an IFA anyway about which Stakeholder to get. They know about the histories of the pension providers and can use their experience to steer you away from poor performers.

What you must not do is to delay taking action see the cost of delaying

Top