Introduction
Pensions: the basics
Everyone needs to plan for their retirement. People are living longer and healthier lives, so it's even more important to think about how and when to save for retirement and how long to continue working.
Pensions can be confusing and many people don't know where to begin, especially when there are so many other things to spend your money on. But the truth is that a pension is one of the most effective ways to save money because you can get tax relief on the money you save in a pension scheme.
So, with a bit of planning, you can do a lot to help yourself get ready for retirement. Fairly small changes now can make a big difference to your life in the future - and you don't need to blow your monthly budget.
This section will help you understand the basic facts you need to know about pensions, including:
- what is available to you from the State when you retire
- some of the financial choices you can make to prepare for your retirement
- where you can go to get more information so you can start planning for your retirement now
- practical and realistic steps you can take to help you save for your retirement
This is a general introduction to the subject of pensions, but please note that it is only a starting point and not a full statement of the law.
You may find it helpful at this stage to do a quick financial healthcheck. This is a quick and easy tool to help you start planning your finances. It takes a few minutes to complete and is completely confidential.
Do your own financial healthcheck on the Financial Services Authority website
While reading this section you may find words and terms that you do not know the meaning of. You can use the glossary to help you understand them.
Pensions: a note about the future
The Pensions Act, which became law on 26 July 2007, makes changes to the State Pensions system. In the main, these changes will only affect you if you reach State Pension age on or after 6 April 2010. These changes include:
- introducing a new system of credits which will increase the number of people who would become entitled to a State Pension
- increasing the basic State Pension by the rate of the increase in earnings from 2012 at the earliest and by the end of the next Parliament at the latest
- increasing the State Pension age from 65 to 68 between 2024 and 2046
- abolishing contracting out for defined contribution occupational pension schemes and personal pension schemes
Find out more about Pensions reform
We will publicise any changes to the current system before they are introduced.