Angela Eagle, Minister for Pensions, sets out the reasons why saving what you can when in work is the foundation for a more secure future when you retire.
Planning and saving for later life might not be top of your agenda, especially if you’re looking for work in the current economic climate. However, we are all living longer and most of us are likely to spend over 20 years in retirement, which is why thinking about your long-term financial future now, is essential. There might be many calls on your money and retirement might seem a long way off, but saving for the future is vital.
We want to encourage people to start saving for later life as early as possible. In fact, with the creation of the child trust fund, a savings and investment account for children, that saving habit can start from Day One!
We’ve also made the State Pension simpler and more generous, but most people will want to live on more. The earlier you start saving for retirement, the more likely you are to have the kind of lifestyle you want when you stop work.
Saving what you can as you go along will help you plan ahead with more confidence. Think about the best options for you and explore ways to make your money work harder, including tax efficient savings like ISAs and pensions.
Despite the stereotype of spending and excess, 18-34-year olds tell us they are saving. In a YouGov survey for the Department for Work and Pensions, over half agreed that the current economic downturn has changed the way they think about managing their money, with a third agreeing that now is a good time to put more aside. When asked, many included saving for holidays, a rainy day and a deposit for a house as their top priorities with saving for retirement further down the list. This shows that young people do have a saving habit, which is great. However, those not saving into a pension now don’t realise the earlier you start saving into one, the harder your money works for you.
In fact, we know that nearly 9 million 18-34 year olds have no pension, and as Pensions Minister this is one of my biggest challenges. Often, people opt out of the company pension when they first start a job because money is tight and they need that little bit extra coming in. However, there are a few things you should think about first.
Three reasons to start a pension:
Pensions aren’t just for pensioners. When you are in your 20s, 30s, or 40s, retirement seems a long way off. But the earlier you save, the harder your pension pounds work for you. Saving what you can as you go along will help you to have security and comfort in your later years.
Advice and information about planning and saving for later life can be found at www.direct.gov.uk/pensions
We’ve also made the State Pension simpler and more generous, but most people will want to live on more. The earlier you start saving for retirement, the more likely you are to have the kind of lifestyle you want when you stop work.
Saving what you can as you go along will help you plan ahead with more confidence. Think about the best options for you and explore ways to make your money work harder, including tax efficient savings like ISAs and pensions.
Despite the stereotype of spending and excess, 18-34-year olds tell us they are saving. In a YouGov survey for the Department for Work and Pensions, over half agreed that the current economic downturn has changed the way they think about managing their money, with a third agreeing that now is a good time to put more aside. When asked, many included saving for holidays, a rainy day and a deposit for a house as their top priorities with saving for retirement further down the list. This shows that young people do have a saving habit, which is great. However, those not saving into a pension now don’t realise the earlier you start saving into one, the harder your money works for you.
In fact, we know that nearly 9 million 18-34 year olds have no pension, and as Pensions Minister this is one of my biggest challenges. Often, people opt out of the company pension when they first start a job because money is tight and they need that little bit extra coming in. However, there are a few things you should think about first.
Three reasons to start a pension:
- It’s one of the most tax efficient forms of saving. For every £1 you get at least 25p added by the taxman. This means the money you put into your pension will increase by at least a quarter and your savings grow tax-free as well.
- Saving earlier is easier – £1 invested in your 20s could be worth 40% more than one put aside in your 40s.
- Your employer might add to what you save each month. If you decide not to pay into your company’s pension scheme, you could miss out on an extra 6% of your salary in contributions from your boss – £1,500 a year if you earn the average.
Pensions aren’t just for pensioners. When you are in your 20s, 30s, or 40s, retirement seems a long way off. But the earlier you save, the harder your pension pounds work for you. Saving what you can as you go along will help you to have security and comfort in your later years.
Angela Eagle MP
Minister for Pensions
Angela Eagle MP is Minister of State for Pensions and the Ageing Society. She was elected as the first ever Labour MP for Wallasey in 1992, after holding a number of posts within the Labour Party. Angela was educated at Formby High School, and then gained a BA (Hons) in Politics, Philosophy and Economics and St John's College Oxford. She worked for CoHSE (now UNISON) as a Researcher, the Press Officer, and then Parliamentary Liaison Officer, before being elected to Parliament.
Advice and information about planning and saving for later life can be found at www.direct.gov.uk/pensions
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