Maintain your lifestyle after work
EVERYONE wants to enjoy the good life as they get older – and it's perfectly possible to do so. Saving a little money every month for the future really can work wonders.
As these relatively small sums accrue, a pot of cash should build up to the point where it really can make a big difference to your quality of life in retirement.
And thanks to a new law just introduced, which means employers have to enrol millions of workers into a pension scheme and pay into it too, preparing for a comfortable and relaxed life after work without money worries has never been easier.
Employers have to automatically enrol workers who:
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Valid until: Sunday, May 26 2013
are not already in a workplace pension scheme
are aged 22 or over
are under State Pension age
earn more than £8,105 a year (2012-13 tax year, this figure may change each April) and
work, or usually work, in the UK.
A workplace pension, as it is known, is likely to be one of the best incentives you'll ever be offered to put away money for your future.
But there's even better news. If you save a sum from your earnings every month, then your employer will make a contribution to your savings too. Even the government will do its bit to help by providing you with tax relief on the cash you put away.
You might think this sounds too good to be true, but it isn't. In fact, it makes a huge amount of sense.
We all want to be able to relax in our retirement, but unfortunately, many of us just aren't putting away enough money to fund all the things we're planning to do when we finish work, such as visiting our families, taking up hobbies and enjoying holidays.
Retirement doesn't come cheap and we all have to deal with rising prices. Of course, the basic state pension will cover the basics – in this tax year, it provides £107.45 a week – but you may well want more than this to meet your own plans for the future.
Why is the government encouraging us all to save in this way?
That's simple – it's because as a nation, we're not saving enough to pay for our retirement.
A survey conducted in 2011 by the financial giant Scottish Widows showed that less than half of all UK employees are contributing to a workplace pension.
Under the new scheme, everyone wins.
Companies and organisations benefit because the top-up money they're putting in encourages employee loyalty and
But of course the biggest winner of all is you. Your cash, plus the extra contributions from your employer and the government, will be placed in a good investment scheme with strict qualifying criteria.
And, as all the work of managing the scheme will be done by your employers, you can just let the cash pot build up.
Over the years, the value of investments can go up and down. But even if the value goes down in the short term, it is likely to recover in the long term.
You don't have to be in this new workplace pension scheme – you can tell your employer you'd like to opt out at any time, and your monthly contributions will stop.
If you have already been signed up for the new pension scheme, then you'll know how simple the process is. There aren't any complicated forms to fill in and you will get an annual statement that shows how your pension is doing. Some schemes also let you check progress online.