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When planning for the future and by that I mean retirement the sooner you can start planning and making provision for the future the better. I say this as time passes by very quickly and before you know it another twenty years will have passed. There are many ways that one can make provision for ones retirement and good advice could be to spread your eggs and not put them all in one basket. Also personal priorities such as getting on the property ladder or starting a family are some of the items that will probably be given a far higher priority than pension planning. Currently in the UK the state retirement age is 60 years for woman and 65 for men but these ages are starting to rise. Over a phased time these retirement ages will rise to 65 for women. As I have said the State Pension age is 65 for men born before 6 April 1959. For women who were born on or before 5 April 1950, the UK State Pension age is 60. The State Pension age for women born on or after 6 April 1950 will increase gradually to 65 between 2010 and 2020. From 6 April 2020 the UK State Pension age will be 65 for both men and women. Between 2024 and 2046 the UK State Pension age will rise for both men and women. The increase will be gradual, happening over two years every decade. The changes mean that the UK Pension age for men and women will increase from 65 to 66 between April 2024 and April 2026. Then ten years later between April 2034 and April 2036 the pension age for men and women will increase from 66 to 67. Then in a further ten years between April 2044 and April 2046 the UK State Pension age for men and women will increase from 67 to 68. So these changes on their own make a very compelling reason to start making your own private pension arrangements to complement what you will get from the state pension. My personal experience is that the sooner you start a pension plan with even a small regular monthly sum so the sooner the better is the answer as it gets you into the habit of putting some money aside on a regular basis. Also the longer that ones contributions are invested the better the investment return will be. This is simply that the longer the funds are invested they tend to grow more exponentially with a far greater rateurn. One reason for making your own private pension provision is simply that the Government will add 20% of your contribution if you are basic tax payer and 40% if you are a higher rate tax payer. The catch of course is that when you get to draw your pension that income is taxable. However you can usually draw a tax free lump sum of 25% of the fund value which can be very useful. Pension plans can provide a good degree of flexibility in planning for the future. For example some body may want to retire early perhaps a few years before the date that one would qualify for the state pension or indeed the reverse one may be working past the state retirement age and want to defer taking your personal pension for that very reason. Personal pension plans do provide this kind of choice and flexibility. The latest thinking is that pension funds can now be invested in a Self Invested Personal Pension (SIPP) which means that the plan holder is able to choose the investment funds and this gives the plan holder a great choice in investment. Expenses in managing the pension plan are minimal if it is a self administered one. The Author writes many articles on reclaiming Income Tax in the UK and for further information one of his web sites is at Paye Reclaim
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