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The Credit Cruncher was conceived to help you to keep up to date with credit crunch and recession developments, it provides some helpful credit crunch advice and it addresses personal debt. The Credit Cruncher also seeks to explain how the credit crunch started and shed some light on the worldwide recession. Recently, we have begun to look at how BREXIT will affect the UK economy. Please feel free to leave comments where relevant.

8 Oct 2008

Starting a pension

In these troubled financial times, there are those who have been asking if this is a good time or a bad time to start a pension. I would that it is ALWAYS the right time to start a pension. Over the full term of the pension, the ups and downs of the stock market should really iron themselves out.
If you are over twenty, then you should consider a pension, most UK employers are now obliged to offer a pension scheme that can easily be transferred when you change jobs (stakeholder pension). Many employers actually contribute to the scheme too - if this is the case, then YES - it's a no-brainer, take advantage of any company scheme that offers to contribute to your pension.
Even if they don't contribute (there is no requirement for them to), it should be very easy for your employer to arrange your contributions and take care of the tax issues.
The only circumstances where you don't need to think about a pension is if you are working on a casual basis and will continue to do so, or likely to earn vast amounts that will enable you to make your own financial arrangements for your future.
My final bit of advice is this: don't go half-measures - if you decide to do this, make a real go of it to make sure you end up with a decent income. If you just 'dabble' and don't really put a significant amount in, then you will have wasted all your money.
Consider this (UK citizens only...), if you DON'T put money aside for your pension, what will happen? The state will provide you with income support up to a set level. If you only put a small amount into your pension, you may find that all you have done is to take the onus off the state to look after you, and you may well have only provided enough to just keep you above the level where the state was going to support you anyhow! So...either do it properly and set yourself up for a decent retirement or don't bother because the state is obliged to look after you.
The days of great employers offering fantastic pension plans are very quickly disappearing, it is up to you to sort out your own future now, the government has come half-way by making stakeholder pensions available to all - the smart people will take full advantage.

Related posts:
How to survive recession
Will we all end up broke?
How long will the credit crunch last?


Ross Taylor said...

I agree with your main points, which I see as:

* Take advantage of a company scheme if there is one.

* Either go for it or do nothing.

I have one more option for you - never retire.

jay said...

Funnily enough that is also an option I am considering... I am quite prepared to work on into old age if needs be - good point I wish I had remembered to mention it.. if the subject arises again, I will include this option.