Retirement Planning

Do you need a pension?

A pension provides you with an income when you retire.

Forward planning as early as possible will help you to save enough towards retirement to achieve a particular standard of living. This might be the standard you are accustomed to during your working life or something different.

Retirement is a major milestone where our finances can change dramatically and sometimes people are surprised at how much they need to live comfortably.

Keeping an eye on your pensions, reading your annual benefit statement and regularly reviewing your finances is an important aspect of retirement planning, which should be done at any age.

Having a work place pension means you are regularly saving into your pension and your employer is paying towards your retirement. Before deciding to opt out of a work place pension consider your options as there are various schemes available.

Under the RCPS, there are options such as the Partnership scheme where your employer contributes and you decide how much you pay in. Your employer will also match your payments up to a further 3% of pensionable salary. You do not have to make any payments but you are still saving for retirement.

How much do people spend in retirement now?

The Pensions and Lifetime Savings Association (PLSA) Retirement Living Standards (RLS) has been developed to help people picture what kind of lifestyle they could have in retirement. It is a useful resource to help think about what sort of pension income you might want to aim for.

Their research estimates that a single person in retirement today is spending £14,400 a year for a minimum standard of living. A couple with a comfortable living standard are spending £59,000 a year. The current State Pension is just over £11,500 per year, and likely to rise to around £12,000 from April 2025.

Based on the RLS it is clear that State Pension alone is not enough, which is why your occupational and private pensions are essential. Take a look at their research and use the information to consider what level of pension income you might want to aim for and then compare that to what you have already accrued.

The details are on the Retirement Living Standards - external link - page.

State Pension

The State Pension is a regular payment that you may get when you reach state pension age, you need to claim this because DWP do not pay this to you automatically.

On 6 April 2016 the New State Pension was introduced. The new state pension page - external link - contains information and instructions on how to claim your state pension.

You can use the Check your State Pension - external link - website for an estimate of what you may receive.

If you reached State Pension age before 6 April 2016, you could get more money if you delay claiming or stop your State Pension. More information can be found on the Deferring your State Pension - external link page.

Additional information that may be helpful

Age UK have a Pensions Calculator - external link - that allows you to work out how much money you will need in retirement and how much you can expect.

The Money Helper - external link - page contains information to help with explaining how pensions work and can provide impartial guidance for the over 50s.

The Retirement Living Standards (picture your future) - external link - page, contains information about living standards and what life in retirement might look like.

Links that may be helpful

Articles in the news

BBC News Business Pension income needed to retire jumps as family costs rise - external link -.