It’s never too early to start sav­ing into a pen­sion plan

THE MONEY PLAN­NER

Gloucestershire Echo - - CASHING IN - YOUR FI­NANCE EX­PERT WAR­REN SHUTE Deb­bie H

QI AM in my mid-thir­ties and friends keep­ing telling me I should have a pen­sion! When is a good time to start pay­ing into a pen­sion and how should I go about get­ting it right? I keep hear­ing hor­ror sto­ries of peo­ple putting their pen­sion monies in over­seas prop­erty and los­ing the lot. What is the best ap­proach?

AMANY leave it far too late to start pay­ing into a pen­sion. Pen­sions are the best sav­ings plan around – did you know that, for ev­ery £1 you in­vest, the Govern­ment will in­vest 25% tax free into your pen­sion pot even if you don’t pay tax and if you’re a higher rate tax payer (i.e. you earn more than £50,000) you can claim some ad­di­tional tax back as well?

It’s a no brainer to me. The prob­lem is in the word pen­sion.

Many equate it with old age, but the re­al­ity is every­one should be in­vest­ing in a pen­sion. When you’re in your twen­ties and thir­ties, re­tire­ment is too far away to even con­tem­plate wor­ry­ing about how much you have to save, but as time passes, the pres­sure builds and the con­ver­sa­tions about when you’ll re­tire be­come more com­mon.

A pen­sion is noth­ing more than a tax de­ferred sav­ings plan. In the UK ev­ery em­ployee is of­fered a work­place pen­sion thanks to auto-en­rol­ment law. They’re set up for you, they’re typ­i­cally low-cost and are a good op­tion to con­sider, es­pe­cially when start­ing out.

The first place you should look is your work­place pen­sion, with­out ques­tion. If you don’t have ac­cess to a work­place pen­sion, then set up a per­sonal pen­sion. You can do this eas­ily on­line (I have a site called Lexo.co.uk for ex­am­ple), it’s nice and straight­for­ward.

If you al­ready have siz­able pen­sion as­sets, con­sider seek­ing in­de­pen­dent ad­vice from a cer­ti­fied fi­nan­cial plan­ner, pen­sions can be­come com­plex and go­ing it alone with large sums is risky.

My golden rule would be this: the best time to start putting money into a pen­sion was yes­ter­day, the sec­ond best is to­day.

War­ren Shute is the au­thor of the best­selling per­sonal fi­nance book The Money Plan. Send your ques­tions to the­money­plan­[email protected]­ren­shute.com. Get his free money guides at war­ren­shute.com

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