BE SURE TO SAVE ENOUGH TO HAVE A GOOD PENSION FUND

IT’S hard to think about saving for the future when everyday finances are usually the priority – especially during uncertain times. But having a pension is an important step to a more secure and comfortable financial future.

Research from Scottish Widows shows that while more people are saving into their pensions, four in 10 are still not saving enough, and more than one in 10 are saving nothing at all.

Meantime, almost three-quarters are not sure how much is going into their pension, and huge numbers don’t have a clue how much they have saved or how much they might need to see them through their older age.

It means that more people are going to have to work longer than they think.

Robert Cochran, senior retirement expert at Scottish Widows, says: “It’s good news that more people are putting something away towards their older age. But that is just the beginning – they now need to look into the detail of how much they are saving to ensure they are on track for the retirement they are hoping for.

“If they don’t have the key questions answered, it’s a stab in the dark trying to figure out how much is enough and what to do next.”

Robert says there are three questions you need to ask yourself to get your later life finances on track.

Here, he goes through those questions and suggests a few things you can do straight away to get you on track with your retirement saving.

The first step to retirement planning is finding out what you already have in place. This means tracing any existing pensions and checking how much is in them.

Think about all the places you’ve worked in last 10 years or even further back.

Life changes fast and it’s easy to lose track of an old pension – especially if you‘ve changed employers throughout your career.

If you need to track down a lost pension, you can:

■ Contact your old provider who can directly ■ Contact your old employer if you don’t remember the provider

■ Use the Government’s free service to trace lost pensions at gov.uk/findpension-contact-details.

Also, find out how much state pension you will pension help receive – currently £175.20 a week for those who qualify for the full amount – at gov.uk/check-state-pension. Different private pension schemes may have different charging structures, so once you know how much you’ve got, it might be easier to manage your money if it’s all in one place.

Look at the pension plans you have and whether you can combine them. Check you won’t lose out on any benefits, guarantees or special features. Before combining your pots, you should consider whether it’s right for you – if you’re not sure, a financial adviser can help. Find an independent financial adviser via unbiased.co.uk or vouchedfor.co.uk. Once you know what you have, you can then consider...

Research by Scottish Widows found that the average person expects they will need an income of around £25,000 per year for a comfortable retirement.

There are lots of online tools and free calculators to help show you what your pension income is likely to be.

Check out pensionwise.gov.uk, where you can work out what you may have in retirement, or try scottishwidows.co.uk/ calculators or moneyadviceservice.org.uk – which will help to give you an idea of your income based on the amount you are putting away.

For a fun way of finding out if you are on track to hit your retirement goals, try

QI have been on furlough since April and was struggling to pay bills. I arranged a mortgage holiday and recently asked if I could extend it. But I’ve now just had good news that I am going back to work full time. Can I go back to paying my mortgage.

AGreat news that you are going back to full-time work and full pay. Yes, you need to contact your lender so you can restart repayments – the sooner you do this the better so you can get your finances back on track. scottishwidowsyourfutureself.co.uk – it calculates the age you can retire with the income you want, using your own pension figures.

If you are an employee, you’ll be getting a leg up from your employer and be enrolled into their pension scheme.

Try to ensure you are getting the highest employer contribution on offer and avoid opting out as you will, in effect, be missing out on extra cash from your boss. Employers must make contributions into pensions for workers earning over £10,000 in any one job and between the age of 22 and state pension age.

If you have a workplace pension, you’ll be benefiting from a minimum contribution of at least 8% of your qualifying earnings. This is made up of 5% from you, 3% from your boss, plus any tax relief.

Those who are

QI’m retiring in the next couple of months. I’ve worked out my state pension and private pension incomes and I think I’ll be earning over the personal tax allowance. Will I have to start filling in self-assessment tax forms each year?

No, unless you have more complex income you won’t need to do returns. HM Revenue and Customs will usually send a tax code to your personal pension provider and they will deduct any tax due before they pay you the income.

Aselfemployed still get tax benefits from joining a pension scheme.

All the calculators work the same way. Remember, you are in control and can stop and start contributions to suit your earnings pattern.

While 8% of your income going towards your pension is great, you should consider whether you can afford to pay more than this. Pension experts say we should be saving between 12% and 15% of our pay to give us an adequate income during retirement. But you need to work out what you can reasonably afford and the retirement you’d like.

If you want to increase your pension contributions, speak to your employer to see how to do this.

Often, a bigger contribution from you means a bigger contribution from them too.

You can opt in or out of your work

It’s good news more people are putting money away, but is it enough?

QOld workmates tell me they get lower state pensions as they were contracted out of the state pension by our firm which has since gone bust. I think this will apply to me too when I get my state pension in three years time. Can I find out how many years I may have been contracted out?

AYou can check your National Insurance record to see if you have any gaps or non-qualifying years at gov. uk/check-national-insurance-record or call 0300 200 3500.