Have you checked your pension?
You’re probably pretty good at keeping a regular check on your bank balance. But what about your pension? Your pension can make a big difference to what your retirement might look like, so it's worth paying it some attention. Now's a great time to start – and we can help.
Watch our videos and learn the basics
If you’re new to pensions or just want to brush up on the basics, these videos can get you started.
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More people than ever in the UK are saving into one…but what exactly is a pension plan?
In short, it’s a way of saving for your retirement.
There are different types of pension plans.
A personal pension plan is one you open yourself, while a workplace pension plan is set up by your employer.
So how do they normally work?
Well, you pay money into your plan. And if it’s a workplace one, your employer normally pays in as well.
The government usually then adds a bit extra to your pension savings – known as ‘tax relief’.
How much tax relief you can get depends on how much income tax you pay.
Say you pay income tax at the basic rate of 20%.
To have £100 paid into your plan, it’d actually only cost you £80.
The other £20 would come from the government.
If you’re a higher or additional-rate taxpayer, you need to claim back anything over 20% from the government. You can do this by either writing to HMRC separately, or through their annual self-assessment tax return.
Depending on the kind of pension plan you have, you could get tax benefits in a slightly different way rather than tax relief.
A key thing to remember is that money paid into your pension plan is invested, which means it has the opportunity to grow over time.
But don’t forget that your investments can go down as well as up and you could get back less than was paid in.
When the time comes, there are a number of ways you can take your pension savings and you can choose the way that suits you best. You’ll usually get 25% of your plan’s value tax-free.
Pension plans are designed with the long-term in mind.
Your payments, any employer payments, any tax benefits and potential investment growth can all add up and can help you save for the retirement you want.
Laws and tax rules can change and will depend on your own circumstances, including where you live in the UK.
From shopping and gaming to chatting with friends, people do a lot online these days. And you can keep track of your pension plan, too.
If you’re a Standard Life customer, depending on what type of plan you have, here are five actions you can take when managing your plan online or on our app:
- You can update your important information – like your personal email address, home address and phone number; your beneficiaries; and your retirement age.
- You can access useful tools and resources to help you plan for retirement.
For example, you can use our retirement income tool to get an idea of how much money you could have in future and the type of lifestyle you’re on track for.
- You can see how much your pension plan is currently worth and how your investments are performing.
- You can view and manage your payments and withdrawals, change how much you pay into it. And from age 55 (rising to 57 from 2028), access your pension savings.
- You can bring some or all of your pension pots together into one single plan, which could make it easier for you to keep tabs on your pension savings.
With just a few taps of a screen or clicks of a button, you can check in on your plan and make changes that are right for you…wherever you are.
This can help you cut down on paperwork and do more with your hard-earned pension savings.
Transferring pensions will not be right for everyone. You'll need to consider all the facts and decide if it's right for you
Money invested is at risk
What do a pension plan and a set of keys have in common?
It’s not that unusual for people to misplace them! Today, there’s almost £27 billion sitting in lost or dormant pension plans.
If you end up with more than one plan, it isn’t always easy to keep tabs on them.
But to help you keep track and know how much money you have in pension savings, you can:
- Keep your personal details – like your home address – updated across your current and past pension providers so they can still get in touch with any important information.
And make sure your providers have your personal email address so that they can still contact you via email even if you leave your job.
- Start looking for any lost pension plans you think you have today.
Putting a few details into the government’s Pension Tracing Service, like the names of your previous employers or providers, may be enough to help you find any plans you misplaced.
- Consider combining your pension plans. This basically means bringing some or all of your old plans together into one single plan.
When your plans aren’t scattered across different providers, it can be much easier to keep track of what you have.
Combining can even help you cut down on admin and paperwork, as you won’t need to update as many providers when you need to change things like your personal details.
- And take advantage of online services to help you keep track of your pension online and on the go through an app
Combining pensions will not be right for everyone. You will need to consider all the facts and decide if it's right for you.
Money invested is at risk.
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Part of planning for retirement is understanding how much income you might need.
Are you dreaming of going on holidays abroad once you’ve waved goodbye to work?
Will you have a car to run?
Fancy going out for dinner with friends regularly?
Don’t forget, you’ll have your essentials to cover, too.
To help you figure it all out, we have some tools you can use.
You can work out how much you’ll need on our retirement tool.
Then we’ll give you an idea of how much money you’ll need to fund it.
And if you’re a Standard Life customer, you’ll have access to our retirement income tool online and on our app.
This can help you see what kind of lifestyle you’re currently on track for.
And anyone can check the Retirement Living Standards, from the Pensions and Lifetime Savings Association at retirementlivingstandards.org.uk
These standards can help you understand what you might need for a ‘minimum’, ‘moderate’ and ‘comfortable’ lifestyle after you retire.
If you find that you’re not quite on track for your ideal retirement,
Try not to panic.
Instead, you could see it as an opportunity to decide what to do going forward.
For example, you might decide to pay a little more into your pension plan each month
And you can keep an eye on the value of your pension savings online.
Learning how much money you might need in retirement
Can help you make decisions about your financial future
And could help you feel more confident about it.
Remember, a pension is an investment. Its value can go down as well as up and could be worth less than was paid in.
Compound growth is a powerful concept that effectively makes your money work harder for you
In fact, it’s so impressive that Albert Einstein is said to have dubbed it the eighth wonder of the world
Here’s how it works:
When you put your money into a savings account or an investment
Compound growth is the extra money you can earn on top of your initial investment
It’s called ‘compound’ growth because, as time goes by, any investment growth or interest you earn starts to build on itself and potentially grow along with your original money
Let’s say you invest £1,000 and it achieves 5% investment growth each year
At the end of the first year, you’d have an extra £50 from the investment growth, bringing the total to £1,050
But here’s where compounding comes in:
In the second year, you not only earn 5% growth on your initial £1,000, but also on the £50 you earned in the first year
So you’d earn £52.50 in your second year, making your total £1,102.50
As time goes on, compounding can become more significant – it’s like a snowball effect
Any growth you earn starts to generate its own growth, which means your money grows faster
The longer you leave your money invested, the more opportunity it has to compound, and the larger the value of your investment potentially becomes
Compound growth can work wonders over long periods, helping you to reach your financial goals
It’s a great incentive to start saving early and consistently, as the more time you have, the more impact compound growth could have on your investments
The value of an investment can go down as well as up and may be worth less than invested.