Five Reasons You Need To Start A Pension NOW!
Hello friends! Today I’m back with ANOTHER blog post about pensions! I know, I know, but seriously! We need to chat! If you are self employed and DON’T pay into a pension, NOW IS THE TIME TO START ONE! There is a very famous saying which is ‘The best time to start a pension is yesterday’ and I promise, it’s true. I’ve written quite a lot of pension posts recently, not because I’m bored or being sponsored – lordy, I wish! But because I truly feel like I can help change some lives this way. I know that sounds wild, but really, if you are self employed and don’t have a pension but you start one because of me, I would be SO proud. I promise you, 60 year old you will thank me… and you! Anyway! Today I’m going to give you five reasons you need to start a pension now!
Also, if you are in a full time job, it’s more than likely you will already have a pension, so this might not relate to you, HOWEVER, I would still advise you to check you have one and check you are automatically paying into it every month. And not only that, I would advise you to make sure that your employer is paying in the maximum contribution as per the company policy as you might find they have a generous pension plan but you aren’t taking advantage of it as you are paying in a small amount and they are just matching your amount. Anyway, speak to your HR department or Finance department and just check! It’s always worth checking! Also, you can start a private pension on top of your workplace pension which might be worth doing and if you have old pensions from old workplaces, you can transfer them all into one place and keep them neat and tidy. I promise, it’s easier than it sounds! Anyway! Let’s chat pensions!
Also, before we get started, it can be hard to start a pension if you are self employed and don’t have a financial advisor, so I use Pension Bee. If you want to sign up, you can use my refer-a-friend code which gets you £50 when you sign up. I also get £50 but that is NOT why I’m writing this post! Alternatively you can open one with Aviva.
State Pensions Aren’t Enough To Live On
I’m sorry, but they aren’t. The current state pension is £179.60 a week, which is not much to live on. Especially when you consider the UK poverty line is around £152 per week (after housing costs). And who knows what the state pension amount will be by the time we retire, it might be more, but it’s probably going to be less. Personally, I try to see my state pension as an add-on to my personal pension. But however you see it, please think about the state pension amount and consider what you will be living on in your old age, because the answer is probably going to be ‘a pension’ and if you haven’t started one yet, you really need to.
A Pension Can Also Act As a Life Insurance Policy
Do you have children or a partner?! If the worst happened and you were to leave the party early, you would want them to be financially secure, right?! Whilst life insurance policies are amazing and if you can afford to get one, then you should, but if you haven’t set one up yet, it’s nice to know that your pension can be act as a bit of a life insurance policy too. Just check with your pension provider that it would be passed onto another person in the event of your death and make sure you select a nominee (or nominees) for it to be passed onto. Also, if you are a divorcee and you have remarried, make sure your older pensions have been switched over to your new partners in the years since you split. As I’m pretty sure you would be turning in your grave if your pension pot went to your ex. Sorry to be morbid, but if 2020 has taught us anything, it’s good to plan ahead!
Pensions Are The BEST Savings Account You Will EVER Have
It’s true! Right now a ‘good’ ISA interest rate is around 0.4%, where as a pension can give you WAY higher growth. I just logged into mine and it’s showing my pension has grown around 13% this year from interest and investments alone. Which is AMAZING! And that 13% is being reinvested constantly so it’s growth on growth on growth! We love to see it!
For Every Pound You Pay Into Your ISA, The Government Will ‘Give’ You 20% On Top
No REALLY! For all the cash you pay into your ISA, the government will add in 20% as tax relief. It’s SO good! So when you pay in £100, it will magically turn into £120. If you pay in £1000, it will turn into £1200, no joke and then that FULL amount will be invested for you and if your pension is like mine, it will grow around 10-13% per year on top of that! SO GOOD! It truly is the best savings account you will EVER have!
You Might Not Have To Wait Until Retirement Age To Access Your Cash
If you have health issues and you are worried that you will need to retire earlier than the ‘normal’ retirement age (you can usually access your pension at 55), then it is possible to access your pension earlier. You might need to have a recognised reason, like an accident or poor health which means you have to reduce your working hours or stop altogether, but it’s good to know you can access your cash early if needed. In a similar way that your pension can act as a substitute life insurance policy, it can also act as an income insurance in some instances.
A few questions I want to answer about Pension Bee…
Is PensionBee safe?
With every pension fund there is always a risk to your savings, as your money is invested in the market and precious metals which can go up and down. However, that being said, there are professionals investing your money and doing a much better job than you and I could! Is Pension Bee safe? Yes, they are a great company who look after a lot of peoples’ pensions and they are well trusted within the industry and with savers. Sign up using my refer-a-friend link and get £50 when you join!
Should I use PensionBee?
Yes, PensionBee is a really user friendly platform for anyone who wants to transfer 1 or more old pension pot into one easy-to-use place. I also like it as it projects your future worth so you know if you need to consider upping your contributions. Sign up using my refer-a-friend link and get £50 when you join!
How much does PensionBee cost?
PensionBee don’t charge you a set up fee, nor do they charge you a locate or transfer fee to move your old pensions into Pension Bee. You also can set up Pension Bee without the aid of an Financial Advisor, which is a huge saving. Depending on which plan you choose, there will be a small annual management fee of between 0.50% – 0.95%, which is standard for any Pension management company AND you won’t notice the money as it will essentially come out of the growth, not your pension pot.
Can I withdraw money from pension bee?
At the time of writing this post, Pension Bee allow their users to withdraw money from your 55th birthday, or 57th birthday from 2028. As with all pension funds, you can take a lump sum of 25% tax free or take the full amount but with tax payments. There are also exemptions to this for extenuating circumstances.
Is Pension Bee Easy To Set Up?
Yes, it’s very easy to set up. You can set it up online or via an app and manage it via the app. It’s very easy to use and easy to understand. You can set it up within a few minutes, Pension Bee will locate your old pensions and put them in one ‘pot’ for you to see and they will manage it from there. Perfect for non-finace savvy people who still want a great pension when they retire! Sign up using my refer-a-friend link and get £50 when you join!
Do I need a financial advisor to transfer my pension?
No, a lot of pension companies will tell you that you need a financial advisor to start or transfer a pension, but this is not true. You can start a pension with Aviva, OR you can transfer an old workplace pension with Pension Bee. Neither company require you to do it via a financial advisor (which can be costly) and both are great companies who your money is safe with!
Do I need a financial advisor to set up a pension?
No, you do not need a financial advisor to set up a pension, although some companies ask for one. This can be VERY costly especially if you are young or self employed and you won’t be making large contributions every month. It can also be very intimidating speaking to a financial advisor. If you want to set up a pension without a financial advisor, you can do this through Aviva, or if you have an old workplace pension that you want to transfer and reactivate, you can do this via Pension Bee.
What is the best pension for self-employed?
If you are self employed you will not have a workplace pension, so you need to start a personal pension instead. You can do this via a financial advisor, but if you don’t have one, you can start one without any set up costs via Aviva. If you have an old workplace pension which you want to transfer and reactivate then you can do this via Aviva or Pension Bee. Both are good trusted pension providers.
Also, if you are an accidental saver during the pandemic, the you might want to read this post on making your money work harder for you. Thank you SO much for reading this post, I hope it’s of help and it made sense and inspired you to start your pension OR pay more into an existing pension. Also, this post contains a refer-a-friend link.
Some Quick Pension FAQ’s Answered!
Do you get a pension if you are self-employed?
Yes! However, if you are self-employed and NOT paying your national insurance, you might want to look into this and how much you will get.
How do I pay national insurance if self-employed?
This is usually done as part of your self assessment tax return. It’s not a huge fee but it’s an important one!
What is the best pension for self-employed?
If you don’t have a financial advisor to set up a pension for you, then you can get one via Pension Bee or Aviva, who are both great pension providers for self-employed people.
How do you set up a pension when self-employed?
You can set up a pension via a financial advisor, although this may cost you for both the meeting and the set up, however, you can set up a pension for free via Pension Bee or Aviva and both companies are brilliant. You can pay in every month or do one off lump sums.
When is the best time to start a pension?
Yesterday! But really, as soon as possible is best. The ideal age to start a pension is around age 22. The more you pay in earlier, the less you have to pay in later!
How much should I pay into my pension?
It really depends on your income and how much you can afford to pay in every month. Personally, I’m paying in £400 a month, which is a lot, but I am trying to play catch up. You can pay in just a few pounds a month and every little counts!