Pensions. It’s not a dirty word.
Pension Awareness Week kicks off on 15 September. It’s a time when organisations like us get people talking about pensions, and how they can help you plan for the retirement you want, whenever that may be. And it doesn’t have to take up a lot of head space, or too much out of your budget, to make a difference to your future by giving pensions a little more attention.
Why your 20s is a good time to start financial planning
Saving or investing a little now could add up down the line, without putting a big hole in your present-day budget.
How to save for the future in your 30s
Retirement might be years away but it’s a good idea to make sure you’re contributing enough right now.
Steps you can take in your 40s to meet your pension goals
Your vision of retirement is unique to you, and if you bring it into focus you may find it easier to set realistic targets.
Understanding your retirement options in your 50s
When the time comes to access your pension, you have several options to consider. We’ll help you get to grips with them.
Pension primers
Pensions can be like an ice cream parlour – definitely a good thing, but with a few too many flavours to choose from. We’ve put together this video to help you understand how the stock market can affect your investments. Give it a watch and you’ll soon be able to tell your pistachio from your mint choc chip.
Pension Freedoms
Transcript for video Pension Freedoms
Nowadays, when going to the cinema, do you notice how many different choices there are to make before we can even view the film?
Do we want Premier Seating? Do we want the popcorn and drink deal? Do we want to go extra large?
There’s a lot to think about and the same can be said when considering how we can take money from our pension savings.
When you reach age 55, (or age 57 from 6th April 2028) you are free to take the money you have saved from your defined contribution pension.
There are 3 main ways to access your money:
Option 1: If you prefer the security of a guaranteed income for life, you can use your savings to buy an insurance policy, known as an annuity. This income may be smaller than with the other options, but you won’t have to worry about running out of money in the future. Just be aware that once you’ve bought an annuity you can’t change your mind.
Option 2: You can take money from your pension as and when you want it and the money you leave in your pot stays invested - as it was when you were paying into your pension. Charges will still be taken but leaving it invested may give it more chance to grow. There is a risk that the value of your investments could go down and you may not get back what has been put in. Remember, there is no guarantee that the money will last a lifetime with this option.
Option 3: You can take all of your money out as cash but as tempting as that is, you’ll need to think carefully about any tax implications and how long your savings will last, as taking large sums of cash could put you into a higher income tax bracket and you could run out of money in the future if you don’t budget carefully.
It is possible to mix the different options too, if you want to.
Before you do anything, you can normally take 25% from your savings tax-free, so you could pay off any debts, travel, or just treat yourself to the small things in life. The remaining 75% of the savings you will take will be treated like your salary and taxed as income.
You don’t have to do anything with your savings either. You can leave your pension exactly where it is.
Whatever choice you make, it’s worth reviewing the options carefully and getting advice.
You should also shop around and compare the different levels of income you could get from different providers.
Here at Aviva, we have dedicated staff available to talk you through your options, so whatever route you choose, we can help you set the scene for the retirement you want.
Helpful links
Citizens Advice
No matter what your money worries – whether they seem insignificant and you feel silly for worrying at all, or they're like an unclimbable mountain stretching into the clouds and blocking your path -there’s always someone you can talk to, and there’s always something you can do.
Citizens Advice offers independent and confidential info and assistance to people with all kinds of worries, including legal, consumer, financial and housing issues.
Money Helper
Money Helper has loads of free online info and guides and they offer advice and guidance on all financial issues, including debt, mortgages and pensions.
Cancer information and support
If you or someone you care about has been diagnosed with cancer, Macmillan can provide help with physical, financial and emotional concerns.
Cancer information and support