When you begin working after leaving school, the last thing on your mind will be your pension. However, the more you go through life, the more you realise you should have been thinking about your pension back when you felt young and invincible! Your pension is your safety net for old age, and should be taken seriously from a young age.
What is a pension?
A pension is, in short, a pot of money that builds up throughout your career, to be used once you retire. If you are self-employed, you are required to pay into your pension yourself; if you are employed by a company on a salary, the company will pay a portion of your paycheque into your pension on your behalf. If you are a civil servant, the state contributes to your pension in a similar system to the private sector.
How much is my pension worth?
Your pension’s worth is entirely dependent on many contributing factors that we will list below. Let’s take a look at how to figure out what your pension is worth.
- How much have you paid into your pension?
If you pay into your pension yourself, either because you are self employed or because you want to top up what is already contributed by your employer, your pension will be worth more. You can check how much your pension is worth using a pension calculator. The more you contribute, the more it is worth – it’s as simple as that!
- Does your company pay into your pension?
A company you work for as a salaried employee will pay a percentage of your salary into your pension on your behalf. Some companies increase their contribution to your pension depending on the number of years you have loyally worked for them, and of course, depending on how much you earn.
- For how long have you been paying into your pension?
The longer your pension exists for, the more it will accumulate value.
Should I get a pension review?
What is a pension review, and is it worth getting? Pension reviews are essentially a deep dive into your pension investments that breaks down how your pension is performing, and whether there are more lucrative alternatives to your current plan.
You should invest in a pension review if:
- You feel your pension could use a boost, but you don’t have the knowledge to orchestrate this yourself;
- If your pension isn’t performing as well as you had hoped;
- If you want to capitalise on a new investment and want to learn how…
Pension reviews are definitely worth their weight in gold if you consider your pension to be performing in a mediocre way, and want to consider alternatives.
Final thoughts…
If you are concerned about your pension or simply want to learn more, use this guide to help kickstart your research into pension plans that work for you. Pensions are essential preparation for your financial future, so you don’t want to miss out on your chance to be well prepared for what’s to come.
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