Employment

Retirement planning

Summary: Raising awareness about pensions and other sources of income for later life.

Please note that the Retirement Planning Project has now finished.

A mini guide to retirement planning and pensions

How savvy are you?

  • Retirement Planning and Pensions are relevant to everyone, regardless of age, gender, health and working situation.
  • Being aware of pension options is great - planning for retirement income is even better!
  • You can pay into a pension even if you are not working.
  • Planning for your income in later life is empowering. The earlier you start, the more choices you have. But doing something about it at any age is better than doing nothing at all.
  • You can start a pension at any age. Even babies can have pension schemes opened for them. They won't be able to get their hands on the money until they are 55, but it will be a rich retirement as long as they keep up the payments!
  • Pensions are like shoes - they come in different types, carry different names and some are riskier than others. As with footwear, you can have as many pensions as you like.

Pension reform proposals

The government published pension reform proposals in 2006 and early 2007. They include:

  • Reducing to 30 years for everyone the number of years of National Insurance Contributions to get a full Basic State Pension. This change will happen from 2010.
  • Linking the Basic State Pension to average earnings.
  • Raising the State Pension Age for women by 2020.
  • Raising the State Pension Age to 66 by 2024.

Tricky pension words

Here are a few pension words you may have heard of but never quite understood what they meant:

  • Contracted out: The State Pension is made up of two parts. There is the Basic State Pension that is based solely on your National Insurance Contributions record. The other part is known as the Additional State Pension. The amount you get depends on much you earn which you are working for an employer. You can contract out or leave the Additional State Pension by joining another contracted out occupational or personal scheme.
  • Second State Pension and S2P: These are just other names for Additional State Pension.
  • Deferred pension: When you reach State Pension Age, currently 60 for women and 65 for men, you have the right to claim your State Pension. However you can chose to defer or delay taking it and earn extra State Pension by doing so.
  • Final Salary: A final salary pension scheme is a type of occupational pension. What you get depends on the number of years you belong to the scheme as an employee and much you earn. The employer usually contributes to the scheme as well as the employee. Another name for Final Salary is defined benefit because for each scheme there is a set formula to calculate the pension you will get.
  • Money Purchase: A money purchase scheme is another type of occupational pension. The money is invested. The amount of pension is based on the total payments into the pension fund and how well the investments have done. The employer may contribute to the scheme as well as the employee. Another name for Money Purchase is defined contribution as the payments made - the contributions - are set.

Guide to Pensions

Our new Guide to Pensions is written for blind and partially sighted people of working age. Download or order your free copy today!

Content author: helpline@rnib.org.uk

Last updated: 20/11/2008 11:13

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