I’m 50; so is it worth me contributing to a Workplace Pension?Posted on: 25 March 2015 by James Hester
Financial journalist James Hester explains why it is never too late to take advantage of a Workplace Pension.
It’s never too late to contribute to a Workplace Pension, especially as you could be turning down extra money from your employer.
Changes to the law with the introduction of what’s known as “Automatic Enrolment” mean that you could get extra money from your boss paid into your pension pot each month.
Every employer must automatically enrol workers into a Workplace Pension scheme if they are aged between 22 and state pension age, earn more than £10,000 a year and work in the UK. Employers will need to make regular payments into the pension schemes of all workers who are automatically enrolled as well as some of those who choose to opt into the scheme.
It means those workers who choose to opt out of their workplace scheme are turning down extra money from their employer as well as tax relief on their own pension contributions. It’s hassle free for you as your employer takes care of all the admin.
Time to save
Someone who is 50 today could have quite a long time to go before they reach retirement. Default retirement age, formerly 65, has been phased out so these days people can work as long as they want to.
For example, someone aged 50 today who retires at 65 could have another 15 years of contributions paid into their pension, including those extra contributions from their employer and what they choose to pay from their own pay packet.
Grow your pot
It’s not too late
So what does all this mean? Well for one, it’s never too late to start saving for retirement, especially when you consider that you could be turning down extra money from your employer as well as tax relief. At minimum contribution rates a workers contribution is effectively doubled by the employer contributions and the tax relief helping you to build your pension savings.
But the other important takeaway from all this is that the longer the time period over which you save into a pension the better. Just a few years more can make an awful lot of difference in the long run.
For more information visit DWP Workplace Pensions
Return to 'We're All In' Workplace Pensions hub
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