Saving for Retirement: What are Your Options?
Thinking about the future can be overwhelming, but knowing your options for retirement can make planning easier. Whether you’re employed or self-employed, it’s important to know the different ways you can begin saving. Understanding these options is the first step in navigating the road to retirement.
Keep reading for a breakdown of the main retirement saving plans available in the UK.
Workplace Pensions
One of the most common ways to save for retirement is through workplace pensions. Most employees are now automatically enrolled in a pension scheme by their employer, which can give them a helpful head start on their retirement savings.
There are two main types of workplace pensions:
- Defined benefit (DB) schemes
Also known as final salary pensions, this plan provides a guaranteed income in retirement based on your salary and the number of years you have worked for your employer. - Defined contribution (DC) schemes
With this plan, both you and your employer make contributions to your pension fund. The value of your pension at the end of retirement will depend on how much both of you have paid in and how well the investments perform.
It is important to regularly review your pension to ensure it is aligned with your goals. You may want to check with your employer to see which type of pension you are enrolled in, if any, so you can plan accordingly.
Personal Pensions
If you are not eligible for a workplace pension or simply looking to boost your retirement savings, then a personal pension could be an option. For example, if you are self-employed, you won’t benefit from any automatic enrollment or employer contributions.
Personal pensions are defined-contribution plans. This means that at the end of your retirement, your total will depend on how much you pay in, how long you have been saving for, and how well your investments have performed. Individuals can usually access defined contribution pension savings from the age of 55 (rising to 57 in 2028).
There are three main types of personal pensions:
- Standard personal pensions
This plan is managed by your provider, who will choose and manage the investments for you. - Stakeholder pensions
This is an accessible, low-cost option. These follow government standards when it comes to things like charges and contribution flexibility. - Self-invested personal pensions
This plan is best for experienced investors. It offers greater control and a wider range of investment choices.
Personal pensions offer flexibility and the potential for investment growth. Contact us today for more advice on how you can boost the value of your payments with this scheme.
State Pension
The state pension is a regular payment from the government and provides a basic income in retirement based on your National Insurance contributions. Typically, this requires 35 qualifying years of National Insurance contributions. This pension is currently available at age 66, but will be increasing to 67 in 2026. You can check your state pension forecast online to see how much you might receive.
Although this plan is helpful, it may not be sufficient for most people, so you may also want to consider additional savings through other pension plans. The choice is completely up to you.
Need Help Knowing Which Option Would Be Best for You?
If you want to start saving for retirement, but you’re not sure where to start or what option would be best for you, then we can help. Contact our helpful team today, who can point you in the right direction and help get you ready for the future.