Britons urged to see if they can boost their retirement fund | Personal Finance | Finance
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In a series of new videos, Moneybox explained the value of having a workplace pension, as well as a personal pension during one’s life. The video stated: “Like your workplace pension, when you pay into a personal pension you get a top up from the government called pension tax relief.
“The amount you’ll receive depends on whether you’re a basic rate taxpayer, a higher rate, or a top rate taxpayer.
“It’s essentially free money from the government and a great incentive to build your nest egg.
“A personal pension also gives you the most control over your investments as you chose your provider, how much you want to contribute, how often, and where your money is invested.
“You can also access your pension a whole decade before you receive your state pension so that’s great news if you want to retire early, go part time, or simply book that dream holiday.”
READ MORE: Retirement planning: The ‘really crucial step’ when it comes to maximising your pension
The full new state pension is currently around £9,000 a year, however people may get less depending on how many years of National Insurance contributions are paid.
If people intend to live a similar lifestyle in retirement to the one they do now, the state pension may not be enough to fund that so people may decide to open up other pensions.
A personal pension can be set up and used to save towards one’s retirement as well as a state pension and a workplace pension.
When contributing to workplace pensions, the government requires a person and their employer to contribute an eight percent minimal annual contribution.
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Even with this additional income, a personal pension can bridge the gap in savings, and give people a better chance at the life they will chose to lead in retirement.
A personal pension may give someone greater flexibility, and investment choice.
It is also useful for combining old pension pots.
Personal pensions are alternative pensions that people may want to start investing into.
Some personal pensions allow flexibility about when payments can be made.
People can pay in on a weekly or monthly basis. Also, they can just make lump sum contributions.
As with all investments, the value of one’s pension can go up and down, and it’s always a possibility to get less than what was put in.
The full new state pension for this tax year is £179.60 per week which is up to £9,339 a year.
This can be a helpful starting point for people’s retirement income.
To have a qualifying year towards a full state pension, one must be making £120 a week which amounts to £6,240 a year.
Additionally, one needs to have made 35 years’ worth of National Insurance contributions to get the full amount – although some may get a different amount, such as if they were contracted out.
The state pension is something that one can claim once they reach state pension age – which has been rising in recent years.
It recently turned 66, but further changes are ahead.
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