Did you know that approximately 30% of people in Britain have no savings?
This is a worrying statistic when you consider that the State Pension Age has recently increased to 66 and will only continue to rise over the next 20 years. This change means that many people will find themselves having to remain in full time employment for far longer than previous generations.
The good news is that it’s never too late to start saving for your retirement, but the earlier you start the easier it becomes and the higher the rewards.
Including the State Pension, the below table gives an example of what you need to save at different ages to save for £20,000 per year during retirement, based on current figures. These figures are illustrative only but show that the younger you start saving the less you have to save to secure a particular level of retirement income.
|
Your starting age
|
Your monthly contributions
|
|
20
|
£80
|
|
30
|
£140
|
|
40
|
£250
|
|
50
|
£460
|
If you save into the Company Pension Scheme you will also benefit from tax relief and your monthly contributions are either matched or bettered by the Company*. This means that for the average employee these figures are easier to reach than you might think.
On a £20,000 annual salary a member of the Employee Pension Plan (EPP) paying 4% contributions and receiving a matching 4% from the Company would have monthly contributions of:
|
Member Monthly Contribution
|
£53.34
|
|
Tax Relief
|
£13.33
|
|
Employer Monthly Contribution
|
£66.67
|
|
Total Monthly Contribution
|
£133.34
|
The longer your contributions are invested, the more opportunity there is for market growth**. The amount of money you have in retirement will depend on how much you have paid in, how you have chosen to invest your pot and how you choose to access those funds at retirement. More information on the available investment options and ways to take your benefits at retirement can be found in our Investment Guide, on our home page.
If you are not currently a member of the EPP and would like to join you can call the William Hill Opt In Line on either f/net 8355 or long dial 0333 041 4874. Your membership would start from the 1st of the following month.
*Contribution rates will vary depending on which section of the scheme you are in. Please refer to the Scheme booklets on the home page if you are not sure which scheme you are in or your percentages.
**Investments can go up or down over time.
How much will I need to live on in retirement?
The answer to this question will be personal to each individual but research by Loughborough University has been used by the Pensions and Lifetime Savings Association (PLSA) to develop The Retirement Living Standards, which are designed to help members understand what kind of lifestyle they might have in retirement.
The table below gives an example of what you might need to achieve one of the three standards of living set out by The Retirement Living Standards.
|
|
Single person
household
|
Two-person
household
|
|
Minimum
|
£14,400
|
£22,400
|
|
Moderate
|
£31,300
|
£43,100
|
|
Comfortable
|
£43,100
|
£59,000
|
If you would like to read more about The Retirement Living Standards visit Home - PLSA - Retirement Living Standards, where you will find more details on how the figures have been arrived at, as well as lots of other useful information on pension planning.
It is worth remembering that your State Pension will also form part of this annual income. If you are unsure what your State Pension Age is, or how much you might receive you can visit https://www.gov.uk/browse/working/state-pension, for more information.
Additionally, MoneyHelper has a number of pension calculators to help you work out what you need to be doing now to enjoy the retirement you deserve in the future, http://www.moneyhelper.org.uk/.