University of Leicester Registered Stakeholder Scheme

If you’re busy buzzing away each day – you’ve probably got a job to go to, a family to take care of, and a home to look after - then saving for your future might not be the highest priority.

But, time goes by quicker than you think, so retirement might not be too far away.

The sooner you act, even if it’s saving just a small amount, could mean the difference between a comfortable retirement and one that leaves you feeling, well, a little flat.

That’s why a workplace pension is the easiest way to build up a pot of money.

Your employer sets it all up and will put your contribution in straight from your salary.

Normally, as long as you pay in, they’ll put money in too.

Some employers even match your contribution, so it’s worth checking how much they’re prepared to give you and building up as much in your pot as you can.

Additionally, you benefit from tax relief on your contributions, the way you receive this will depend on the type of pension scheme you are in . 

Unlike a savings account, your pension savings are invested.

This is to help your savings grow, and the earlier you start saving, the more time they have to grow.

You do have to be aware that investment values can go down as well as up and you could get back less than the amount paid in.

There are a number of ways you can take your money – with up to 25% being tax-free.

You’ll also be able to claim a State Pension when you’re old enough -

as long as you’ve made enough qualifying national insurance contributions.

From April 2024, the full amount is £221.20 a week - probably not enough on its own to live comfortably, but if you’ve built up a workplace pension, it can be a good boost to your savings.

To see what your future could look like, visit our easy-to-use, interactive ‘Shape My Future Tool’, which helps you see how much you’re saving and picture what your retirement could look like.

Salary Exchange – What does this mean?

When you pay into a workplace pension, one way to do this is for your pension contribution to be deducted from your salary. This receives tax relief, but you pay national insurance on your salary before your contribution is paid to your pension.

Another way is with salary exchange – this is a legal agreement.

Salary exchange is an arrangement between the employer and the employee. This means your pension contributions are taken before you pay national insurance and income tax on your salary, so you pay less national insurance.

Let’s have a look at a payslip to see how it works:

For example, say you have a before-tax salary of £24,000 and you put £1,200 (5%) a year of your salary into your pension without the salary exchange option.  As you can see, you actually only pay £960 a year into your pension, as you get 20% tax relief from the government, so that makes up the £1,200 total going into your pension a year. (This doesn’t include any employer contribution). After your pension, tax and national insurance have been deducted, your take-home pay here gives you £19,384 a year.

If you were to take the salary exchange option and have put £1,200 a year into your pension, but your income tax and national insurance was lower, you would pay less tax and national insurance, and your take-home pay would be £19,528.

Tax treatment depends on individual circumstances and the information provided is based on current tax rules, and the tax rules may change in the future.

Your employer will save too, as they won’t have to pay national insurance on the amount that goes into your pension. Employers may even pass their national insurance savings onto you – meaning more money going into your pension savings.

If you are a higher rate taxpayer, you'll get tax relief on your contributions through salary exchange immediately, so you won't have to reclaim this through your tax return.

You will need to be aware, though, that since your monthly salary will be less, this could affect your entitlement to the State Pension, Statutory Maternity Pay, or Life Cover. 

Like any financial decision salary exchange is not suitable for everyone, so, you should speak to your employer to see how salary exchange could work for you. 

If you don’t already have an adviser, you may be able to find one under www.unbiased.co.uk.  You may be charged for this advice.

You can also speak to us here at Aviva. We have dedicated advisers on hand to answer your questions and help you decide if this will benefit you enough. Please note, our advisers can only advise on Aviva’s products and services, except for annuities where they can advise on what other providers can offer. There will be a charge for advice if you decide to go ahead after your first free meeting.

Nowadays,...

...when going to the cinema,...

...do you notice how many different choices there are to make before we can even view the film?

 

Do we want Premier Seating? Do we want the popcorn and drink deal? Do we want to go extra large?

There’s a lot to think about and the same can be said when considering how we take money from our pension savings.

 

When you reach age 55, or age 57 from 6th April 2028, 

...you are free to take the money you have saved from your defined contribution pension. There are 3 main ways to access your money:

 

Option 1:

If you prefer the security of a guaranteed income for life,...

...you can use your savings to buy an insurance policy, known as an annuity.

This income may be smaller than with the other options...

...but you won’t have to worry about running out of money in the future. Just be aware that once you’ve bought an annuity you can’t change your mind.

 

Option 2:

You can take money from your pension as and when you want it and the money you leave in your pot stays invested...

...- as it was when you were paying into your pension. Charges will still be taken but leaving it invested may give it more chance to grow.

There is a risk that the value of your investments could go down and you may not get back what has been put in.  Remember, there is no guarantee that the money will last a lifetime with this option.

 

Option 3:

You can take all of your money out as cash,...

...but as tempting as that is, you’ll need to think carefully about any tax implications......

...and how long your savings will last,  taking large sums of cash...

...could push you into a higher income tax bracket...

...... and could restrict the amount that can be paid into your pension going forward......

...and you could run out of money in the future if you don’t budget carefully.

It is possible to mix the different options too if you want to.

 

You can normally take 25% from your savings tax-free,...

...so you could pay off any debts,...

...travel,...

... or just treat yourself to the small things in life.

 

The remaining 75% of the savings will be used to provide you with an income, which will be taxed like your salary when you receive it. You don't have to receive a taxed income immediately - you can leave the money available to provide you with a drawdown income later - and you can also decide later to buy an annuity using the money you have held in drawdown until then. 

You don’t have to do anything with your savings either. You can leave your pension exactly where it is.

Whatever choice you make, it’s worth reviewing the options carefully and getting advice. You should also shop around and compare the different levels of income you could get from different providers.

Here at Aviva, we have dedicated staff available to talk you through your options,...

...so whatever route you choose, we can help you set the scene for the retirement you want.

 

You have a workplace pension with us, but do you know how much you should be saving into it to give you the type of retirement you want?

How do you know how much money you will need when you stop work, and what type of lifestyle that will allow you to have?

To help people picture their future retirement and what that might cost, Loughborough University and the Pensions and Lifetime Savings Association, who represent UK pension schemes, have put together the PLSA/Loughborough University Retirement Living Standards so that you can see how much retirement income you will need.

The standards are pitched at three lifestyle levels - minimum, moderate and comfortable and show how much you would need a year to pay for those different lifestyles in retirement. All the figures are for 2023 and would include any workplace pensions, private pensions, state pension and savings. The figures on the left in each picture are for a single person and the figures on the right are for a couple. These are net figures, after any income tax.

The standards for Individuals are £14,400 -£31,300  -£43,100 a year and £22,400-£43,100-£59,000 a year for couples and have been based on a basket of goods and services, from food and drink to holidays.

The minimum level covers your basic needs and costs, including your bills. There is also money to spend on leisure activities such as a one-week holiday every year, but at this level you’d have to budget very carefully.

The next level sets the bar higher. With your basics covered, there would be more money to spend on food and clothes and the things you enjoy such as leisure activities.

 

Moving up the scale, here’s where your budget can really stretch and provide more. You would have more financial freedom to spend on luxuries, such as 3 weeks foreign holiday in Europe every year and replacing your car more often.

Everyone is different, but the attitude you have to saving really matters. The good news is that there are things you can do that could make a difference.

If you want to learn more go to the website shown on the screen. This will also provide information on the assumptions used and you can log in to your online account now to see if you are saving enough for retirement. If you decide you would like to increase your workplace pension contributions please follow the instructions on the screen.

Pension planning? That's something you can worry about later?

 

The fact is that tomorrow comes around sooner than you think

So, by saving money now it could lead to you having a better chance of enjoying the future you want

 

So, where do I begin?

 

First, find out what you already have, and what you could have when you retire. There’s the state pension, or course….

 

This is the current weekly state pension for a single person. You need to have 35 years National Insurance Contributions to get this much, which is the full amount. Wouldn’t want to live on that? Maybe not.

So, what other money could you have to live on?

 

Think about any money you’re saving in a bank or building society account, or ISA. Factor that in.

 

Next, if you have a workplace pension, check how much is being paid in each month.

 

The benefit from a workplace pension is that you will normally be eligible for tax relief from the government on your personal contributions. So, if you’re a basic rate tax payer, every £100 which goes into your pension will cost you £80 from your take home pay.

 

Don’t forget that your employer will probably also be contributing themselves. Both tax relief and your employer’s contributions increase your pension without costing you anything.

 

You need to remember that your pension money is invested to try and help it grow- and, as with any investment, the value can go down as well as up and you may get back less than you paid in.

 

If you want to join or make changes to your workplace pension just get in touch with your employer

 

So, in summary, find out what you’ve already got: plan how much you might need- and then take action.

 

Remember, if you really want to make a difference to your future, there’s no time like the present to act.

 

Next, think about what you’re going to need when you’ve finished working. To help with retirement planning visit our website.

 

You’ll find videos, calculators and online tools. Our Shape my future tool can help you get an idea of what your future could look like, and what you can do to make changes now.

 

Tax and state benefits shown are for the 2024/2025 tax year. They depend on your individual circumstances and may change. This presentation should not be regarded as giving any form of financial or investment advice. You should not make your decision on the basis of this recording alone. If you have any doubts whether the product is suitable for your needs, you should contact a financial adviser for advice. An adviser may charge for their services. The value of your pension could go down as well as up and you could get back less than the amount paid in.

 

When you get around to thinking about your finances, what sort of things spring to mind?

 

A mortgage or a car loan? Looking after a family? Paying the bills? Probably not pensions, though.

 

But the fact is that tomorrow comes around sooner than most of us think…. So where do you begin?

 

First, find out what you already have, and what you could have when you retire. Your annual pension statement can help here.

 

There’s the state pension, or course…

 

This is the current weekly state pension for a single person. You need to have 35 years National Insurance Contributions to get this much, which is the full amount. Wouldn’t want to live on that? Maybe not. So, what other money could you have to live on?

 

Think about any money you’re saving in a bank or ISA. Factor that in.

 

Next, if you have a workplace pension, check how much is being paid in each month.

 

The benefit from a workplace pension is that you will normally be eligible for tax relief from the government on your personal contributions.

 

So, if you’re a basic rate tax payer, every £100 which goes into your pension will cost you £80 from your post- tax pay. This tax relief is limited to the amount you earn in the tax year, or the level of annual allowance whichever is lower. Next, think about what you are going to need when you’ve finished working.

 

Think about whether you can afford to save some extra money from your salary. Putting aside just a little now could still make a big difference later.

 

You need to remember that your pension money is invested to try and help it grow and, as with any investment, the value can go down as well as up and you may get back less than you put in.

That’s why it’s important to keep a close eye on the value of your pension and other investments.

 

If you want to join or make changes to your workplace pension just get in touch with your employer.

 

So, in summary, find out what you’ve already got: plan how much you might need- and then take action.

 

And remember, however busy you may be right now, it’s worth taking time out to think about your future…while there’s still time to make a difference to it!

 

To help with retirement planning visit our website. You’ll find videos, calculators and online tools. Our Shape my future tool can help you get an idea what your future could look like, and what you can do to make changes now.

 

Tax and state benefits shown are for the 2024/2025 tax year. They depend on your individual circumstances and may change. This presentation should not be regarded as giving any form of financial or investment advice. You should not make your decision on the basis of this recording alone. If you have any doubts whether the product is suitable for your needs, you should contact a financial adviser for advice. An adviser may charge for their services. The value of your pension could go down as well as up and you could get back less than the amount paid in.

You’re getting closer to your selected retirement age which means more freedom to do the things you enjoy.

 

To make the most of this new stage in your life you need to give some thought to your options, needs and goals. So, where do you begin?

 

First, find out what you already have, and what you could have when you retire. There’s the state pension, of course.

 

This is the current weekly state pension for a single person. You need to have 35 years National Insurance Contributions to get this much, which is the full amount. Wouldn’t want to live on that? Maybe not.

So, what other money could you have to live on?

 

Think about any money you’re saving in a bank or building society account, or an ISA. Factor that in.

 

Chances are, your workplace pension pot will also play a big part in planning the kind of future you’d want for yourself.

 

There are a number of ways to take your money, such as: taking all the money as cash; taking it as guaranteed regular income, or perhaps taking it as more flexible income as and when you need to.

 

Before you make a decision on how to take money from your pension pot, you need to get a clear idea of how much you have there, and how it’s invested.

 

If you want more help thinking about pensions and retirement, a good place to begin is MoneyHelper, the government-backed free guidance service.

 

If you are over 50 you can use the Pension Wise service, from MoneyHelper, online or by phone on 0800 138 3944. They offer a free face to face or telephone guidance session.

 

They won’t tell you what you should do, but they’ll provide you with information to help you understand your options.

 

For more tailored advice, you should speak to a financial adviser. Bear in mind they may charge a fee for this advice. If you don’t have an adviser, you can find an up-to-date list of regulated advisers at

MoneyHelper https://www.moneyhelper.org.uk/en/pensionsand-retirement/taking-your-pension/find-a-retirement-adviser

 

You can access MoneyHelper online at www.moneyhelper.org.uk or by phone on 0800 011 3797.

 

Tax and state benefits shown are for the 2024/2025 tax year. They depend on your individual circumstances and may change in the future. This presentation should not be regarded as giving any form of financial or investment advice. You should not base your decision on the basis of this recording alone. If you have any doubts whether the product is suitable for your needs, you should contact a financial adviser for advice. An adviser may charge for their services.

 

The value of your pension can go down as well as up and you could get back less than the amount paid in.