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3 min read
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By : Mal Kecić

I don’t earn enough to pay into a pension

For some, pension saving is seen as another outgoing which they simply can’t afford but the truth is that every little helps.

With regular small payments from as little as £20 it is possible to change the outlook of your financial future. Also consider cutting back on your expensive spending habits. The sooner you incorporate these habits your pension pot goal won’t look so impossible. And the sooner you start, the less of a burden your monthly contribution will seem and the end goal will be much healthier.

I cannot join my company pension until I am 22

Contributing to your pension as early as possible can make a huge difference to your pension pot in the long run however people are often under the impression there is a minimum age limit of 22 before you can join.

The introduction of auto enrolment means if you are employed, you are automatically enrolled onto the company pension at the age of 22. However you do have the option to join earlier if you wish providing you earn more than £409 a month.

Once I start paying into a pension, I cannot opt-out

I would never advise on stopping your regular pension contributions – committing to regular payments is the most efficient way to ensure you grow your contributions however if you do not have regular income, this commitment can be a little daunting.

There seems to be a common pension myth that once you start contributing to your pension, there is no option to opt-out. However the majority of pensions are flexible and allow you to start and stop your contributions, and is generally pretty straight forward to do. So don’t worry – you are not tied down!

The state pension is enough for me to enjoy my retirement

Unfortunately, providing a pension income of only £168.60 per week, for those eligible for the full amount, the state pension is not enough for most people to comfortably live on.

You can claim the full basic State Pension if you are a man born before 6 April 1951 or a woman born before 6 April 1953, and if you have made national insurance contributions for 35 years or more. Less years mean a lower rate is payable.

My advice – when it comes to safeguarding your retirement, you don’t want to rely solely on the state pension. There are a number of ways to plan your savings and manage your wealth so that you can ensure you have enough to enjoy your retirement. Contact us on info@hentons.com for a chat.

Property is better than my pension

Putting all your eggs in one basket (the basket being your property) is a risky business and is likely to end in tears. A tangible asset that increases in value over time, although property is a great investment, relying solely on this to fund your retirement needs some careful thought.

With property investments also comes a number of taxes which could have an impact on your retirement – inheritance tax, capital gains tax and income tax. However saving into a pension pot will open you to tax reliefs.

It is also important to consider the amount of increase in house prices each year – this can fluctuate significantly and you could experience smaller increases than you were expecting.

Many buy-to let landlords appear to be relying on their properties to fund their pension pot however with a rise in tax liabilities, holding onto buy-to-let properties is becoming increasingly unattractive.

I have to buy an annuity when I get to retirement

Not true! But although another pension myth, they play a very important role.

Buying an annuity is a way of turning your pension savings into a regular income to last you until you die.

Since April 2015, you now have the option to withdraw as much of your pension money as you want when you reach 55 which brings about a lot of flexibility.

Since April 2015 annuities have become a bit part player when it comes to accessing pensions, as people opt for cash payments or remain invested and draw down from their fund to retain flexibility into their retirement.

There is no need to buy an annuity but if you do, you can have peace of mind that you will have a definite regular income that is not dependant on the stock market.


Not sure how to make the most of our pension? Contact us for a chat on info@hentons.com

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