Paul Leatherbarrow, Liverpool
Will 70 become the new 62?
Brits are living longer and retiring younger. We continue as a nation to retire younger. More workers are making smart investment and retirement decisions and that's helping say "so long" to the working world at an earlier age.
Statistics shows that the average "exit" age from the workforce has dropped to five years earlier. As we retire younger, we live longer. Our lifespan continues to hit a record high In Britain. It's safe to say we live to an average age of 80, (men drag the average down). And this upward trend is going to continue. There is a belief that the average lifespan in Great Britain will increase by another 2 years by 2015.
Are we really the worst?
The UK has the worst state pensions in Europe, pensioners have suffered since the link to average earnings was abandoned. The state pays pensioners an income equivalent to just 17% of average earnings. This is the lowest level in Europe and well below the average for all European Union countries of 57%. Even the Netherlands, which has the second-lowest level, provides a state pension nearly double the UK figure, The UK also has one of the highest retirement ages in Europe at an average of 62.2 years, with 57% of people aged between 55 and 65 still working.
What's the Fuss about?
At the heart of the problem is the Government's failure to undo the damage caused by the Tories under Margaret Thatcher, who cut the link between average earnings and pensions in 1980. Since then annual pension increases have been tied to retail price inflation. Because average earnings generally rise faster than retail prices, pensions have been falling behind ever since. Labour has promised to restore the link in 2012, but only if it can afford to. If not then, the change will have to wait another three years or so.
Have we tried to solve the problem?
For many years there has been a gradual shift in the UK pension system away from the state and towards employers and individuals making their own provisions. But a spate of scandals, crises and changes to the legislation relating to pensions has jeopardised this position, generating a lack of confidence in the pensions system among employers and individuals.
Though private pension provision remains strong this position is being undermined as more firms switch from generous final-salary schemes to money-purchase schemes that cost employees more and pay out less.
Did you know that: -
1.4 million Pensioners survive on an income of £5,000 a year or less?
12% of people over state pension age have had to continue working full or part time, to supplement their pension income?
There are currently 13.4 million people who are either not saving or are saving too little in a pension to provide for an adequate retirement income?
How to catch up if you've got little or no pension
If you've built up little or no pension you may want to consider starting a personal pension as well as looking into any options for saving for a pension through work. A good place to start I'm just starting out... I don't have a plan for the future from your first day at work; it makes sense to put something away for the time when you retire. And changes are coming to make it easier to save while you are in work. It's never too early to get the saving habit. Even if it's only a small amount, the money you put away early in life can build up a tidy sum over time. And the sooner you start, the more you are likely to get
How much State Pension Will I be entitled to?
To qualify for the basic State Pension you need to build up enough 'qualifying years' before you reach State Pension age. A qualifying year is a tax year in which you have sufficient earnings on which you have paid, are treated as having paid or have been credited with, National Insurance contributions (NICs).
Depending on how many qualifying years you have you'll get a basic State Pension between the weekly minimum and maximum. For the 2010-2011 tax year these are £24.41 and £97.65 Or you may not receive any at all.
Getting a State Pension forecast
A State Pension forecast gives you an estimate of how much State Pension you can expect to receive at State Pension age based on the current information about you.
Topping up your State Pension
If there are some tax years which don't count as qualifying years it's worth seeing if you can boost your basic State Pension by paying voluntary National Insurance contributions for those years. You usually have to make up the shortfall within six years from the end of the tax year for which they are being paid. You can do this even if you've already reached State Pension age. Find out more from The Pension Service by phoning 0845 3000 168
Taking out a personal Pension
Another way to make additional provision for your retirement is to take out a personal pension or a stakeholder pension. One of the main advantages of taking out a personal or stakeholder pension is that the government will pay tax relief on the contributions you make to your pension fund. This means that for every £80 paid into your fund, the government will pay a further £20.
Also these types of fund are portable, which means if you leave your employment you can take the fund with you...
Joining a company (occupational) pension scheme
If you work for an employer who runs a company pension scheme and are able to join it, you should see if it's in your best interests to do so. If you change employment you'll probably not be able to continue to pay into the scheme. But any pension that you have already built up, you will still be entitled to on retirement or can transfer to another pension scheme.
How many pensions can I have?
You can take out as many pensions as you wish, but each scheme will have its own administration charges. It may be worth seeking advice from an independent adviser before taking out more than one scheme.
Can I pay as much as I want into my pensions?
Since April 2006 you can contribute as much as you want into any number of pension schemes. Each year you'll receive tax relief on your pension contributions up to 100 per cent of your UK earnings (salary and other earned income), subject to an 'annual allowance' above which tax will be charged.
I think the main consideration is to take action, whether it be to start saving, review your existing provision or explore your entitlement to benefits you must act now to ensure you realise those dreams of spending lazy days in the garden, holidays abroad or simply time with your grandchildren, a pension plan will give your retirement a healthy boost
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