Why pensions engagement can’t wait for your retirement
Prospect pensions officer Stewart Mott looks ahead to the events that Prospect will be holding to mark Pensions Awareness Day later this month and explains why, even though your retirement might seem far off, it is still important that you start engaging with your pension now.
It’s easy to neglect our pensions, we save for retirement over many years, and often don’t have a reason to engage with our pension unless we are moving to a new employer.
Pension Awareness Day on September 15 is an initiative to draw attention to our pensions and promote engagement.
It is now an established event, where over the course of one week, the UK pensions industry comes together to help the public understand pensions and how to achieve the retirement they want.
For most employees, pension contributions are deducted automatically from our monthly pay and they really don’t need any further input or administration. It just takes care of itself.
Are you on track?
So, why is it important to engage with our pension?
We save for retirement to provide an income when we need to stop working later in life. If you don’t engage with your pension, you may save too little and be faced with delaying retirement or not enjoying the standard of living that you wanted in retirement.
To know if you are on track to meet your retirement goals, you must first understand the amount of income you need in retirement, and how much you will need to save to meet this goal.
The Pension & Lifetime Savings Association have created retirement living standards which aim to help us understand what standard of living we can expect on three different levels of income in retirement. You can read more about their standards online.
Another way of thinking about the amount of income we need in retirement is to base it on the amount we earn before retirement.
Research undertaken by the Department for Work & Pensions showed that the average worker would need two-thirds of their pre-retirement salary as a pension in retirement to enjoy the same standard of living as during their working life.
High earners (in excess of £50,000) would need a lower amount of around 50% to have the same standard of living.
What will you receive?
Defined contribution pensions get their name because the only defined element is the contributions.
Understanding what you will receive in retirement can be difficult. There are calculators that are available online that you can use to estimate what your existing pension savings, along with the amount you are saving, will provide at retirement.
The major pension providers have these tools. Money Helper brings together the support and services of three government-backed financial guidance providers: the Money Advice Service, the Pensions Advisory Service and Pension Wise, also has a pension calculator.
You can access Money Helper’s pension calculator to see if you are on track to meet your retirement goals online.
Prospect pension events
As a union, we want to push forward an agenda of improvements for our members to ensure you have dignity in retirement. Vital to this is a membership that understands their pension provision and its value.
We are supporting Pensions Awareness Day by organising a program of events for our members from Tuesday 14 to Friday 17 September. In the next few days we will be sending out a Prospect Live email with detailed information, but in the meantime here’s what we have planned.
- TUC Fringe – Achieving gender equality in pensions, Sept 14
- Freelancers and Pensions, Sept 15
- Lifetime and Annual Allowance briefing, Sept 15
- Are Collective Defined Contribution Pensions the future?, Sept 16
- McCloud update: Age discrimination in public sector pensions, Sept 17
Your pension provider may also be hosting events for you to attend online to learn about your pension provision and options.
I look forward to seeing as many of you as possible at one of our events.