Mind the Retirement Gap

Are you saving enough for retirement?

We all know that starting the savings cycle early on in our working lives is a logical decision and will ultimately make a significant difference to the amount of money we eventually end up with by the time we reach retirement. However, the simple truth is that many people don’t start thinking about their retirement until much later, when they have lost valuable years.

According to Government estimates, the gap between how much people are saving and how much they need to save to ensure a comfortable retirement is over £57bn. Around 13m people – equivalent to nearly half the working population – are currently not saving enough for their retirement.

Under Government proposals, from 2012 every employee aged over 22 and earning more than £5,000 a year who is not already contributing to a pension will be automatically enrolled in a Personal Account, to make sure they save something for retirement.

All contributions to pensions, whether company or personal schemes, are tax-deductible. This means that a contribution of £1,000 will cost a basic rate taxpayer only £780, and a higher rate taxpayer £600. According to the Treasury, around £13bn a year is currently given away in tax relief and so it is crucial to get your share.

Even non-taxpayers can benefit from the current rules. It is possible to make contributions into a stakeholder pension on behalf of children and still receive tax relief.

In the current tax year, investing up to a net figure of £2,808 with the inclusion of tax relief equates to a total gross investment amount of £3,600.

If you require any further information about the services that we provide or would like to review your financial planning position, please email or contact us.

Levels and bases of, and reliefs from, taxation are subject to change.
Article date: 08.07