Making The Best Decision For Your Future
Much praise has been heaped upon the government’s new pension laws – but will a workplace pension work for you?
For many people, a pension is the largest investment they will make, and while the pot is growing, most of your investment will be in stocks and shares. You’ve probably heard a lot about workplace pensions recently – the government has launched a huge advertising campaign to make us all aware of the new laws that employers have to follow, no matter how big or small their business.
So what do these new laws mean for you, and should you opt out of your company pension scheme? Below are some pros and cons to help you decide – and how to opt out if you want to.
What Does A Workplace Pension Do?
The pension will provide you with an additional source of income once you have retired. Most people will be able to claim a state pension that will cover their needs, but it’s always good to have a little extra to fall back on. How much will depend on how much you contribute, and how early you start.
For many people, the workplace pension is an easy way to set up an additional income for their retirement. the help companies set up schemes, The Workplace Pension Consultancy has been set up.
It May Have A Negative Effect
However, being forced to make these pension contributions could leave you out of pocket. This could cause problems if you have existing financial arrangements. It could also take away from and reduce your required salary income. So budget before you start to pay in, and see if you can afford to part with the cash each month.
Who’s Paying In?
When it comes to this kind of scheme, it’s not just you who’s involved. With a workplace pension, you will receive contributions from your employer too. They should provide you with full details of how much they are going to pay into your pension pot each month. If they don’t, you are entitled to remind them that this is something they are obligated to do by law. The UK government will also relieve you of any tax on your own contributions.
What About Those On A Low Income?
For those on low earnings though, their contributions may be too small to be meaningful in the long term, meaning that they are essentially paying out for nothing. Additionally, these contributions could even affect entitlement to some means tested benefits in the future. If you work part time and aren’t bringing home a lot of money, it’s worth thinking about if your workplace pension really works for you.
If you’ve just signed on to your company pension scheme and have decided that it’s not for you, then don’t panic! You can opt out of the pension scheme if you choose to – it’s a legal requirement that your employer lets you do so. Additionally, if you opt out of the scheme within one month, you’ll be able to get a full refund of the money that you have paid in. Again, your employer has to do this. If you are unsure of where you stand, read through the rules laid down by the government, or talk to someone in your HR department.
Making the right decision
There’s no denying that workplace pension schemes can benefit a large number of people. However, like most things in life, they don’t suit everyone. It’s better to be fully informed before you make a decision on whether you want to take part in your company’s scheme. Remember, you can opt in again after you’ve opted out – so there is room for manoeuvre. What’s important though, is that the way you save for your retirement suits you. After all, it’s your money!