Around 12 million people in the UK don’t have a pension. At the moment, having a pension is not compulsory; however this could change if the government’s plans for the launch of Personal Accounts go through in 2012. While there’ll be an “opt out” option, every employee in the UK will be enrolled into the scheme initially which will demand a payment of 4% of earnings.
Don’t put off ‘til tomorrow what you can do today
Taking out a pension is necessary to provide yourself with a substantial nest egg for your retirement. Much of the younger generation put thoughts of pensions to one side. “Oh it can wait until I’m older.” However, when’s older? Don’t leave it too late or “older” might suddenly become too late.
You will probably be eligible for the government's State Pension but you shouldn’t depend on it as many pensioners who receive it now are struggling to make ends meet. It’s based on the amount of National Insurance contributions you’ve made throughout your working years. It’s recommended that you take out an additional pension plan, as the State Pension can equate to less than £100 per week. This may seem reasonable; however rising domestic heating and fuel costs as well as every day living means that this might not be enough to live on by the time you retire – even if it does go up a little over the years.
Multiple pensions
You can actually have many pensions running at the same time if you wish. Some companies have pension schemes that they pay towards and also take a contribution direct from your earnings to pass onto the pension company. However, not all schemes set up by employers contribute to their employees’ pensions.
Another advantage of having a pension plan is that they attract tax relief on the contributions made and the investment funds within the pension plan. There is a maximum contribution you can make each year up to the level of your salary, with an overall maximum annual allowance which is currently £235,000 for the 2008/09 tax year and £245,000 for 2009/10. A number of schemes now allow you to stop and start payments if you need to, or to pay in a lump sum.
If you wish to invest pension in property, stocks or unit trusts, then you could consider a Self Invested Personal Pension, which are commonly referred to as SIPPs. A SIPP allows you to invest in a much wider choice of investments so you can have a bigger say in where your money is invested. You therefore have the benefit of being able to build a rich portfolio of different types of investments.
Although having a pension is not compulsory, there are many benefits to having one. If you wish to have a comfortable life when you retire, then it is best to have that extra bit of money to make sure that you can live out your dreams. Taking out a pension should be done as early as possible – don't put it off any longer, speak to an Independent Financial Adviser.

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