Some pension rules can have a big impact on people's lives - but only if they know about them
Being able to access your pension savings early can be a lifeline if you're forced to retire early due to ill health. But more than half of Britons (57%) don't know this is possible, a new survey reveals.
An even higher number (63%) don’t realise that self-employed workers get tax relief for pension savings, the new research from the Money and Pensions Service (MaPS) found.
Employees can continue to contribute to their pension while they are parental leave. Doing so can help ensure neither parent faces a poorer retirement because they have taken time out of the workforce to have children. However, more than half of those surveyed (56%) didn't know parents could do this. More women than men were unaware of the rule (61% versus 51%).
However, those surveyed were better informed about auto enrolment in pensions. Some 78% know they can start saving into a workplace pension as soon as they start work.
And 65% know that auto enrolment does not guarantee they will be saving enough for retirement.
Caroline Siarkiewicz, acting chief executive at the Money and Pensions Service says: “It’s clear that many people are unaware of their options when it comes to important events in their lives that can impact their pensions such as becoming a parent or starting their own business.
“Women in particular have many important financial decisions to make when transitioning into parenthood but our findings suggest they are less likely to be aware of their pension options.
“It is positive to see that people have an understanding of how automatic enrolment works. However, our findings suggest that many might be missing out on important information when making decisions affecting their pensions.”
Here's how people in the MaPS study responded to various pension statements and how many were right or wrong:
|Statement||True or false?||Right||Wrong|
|Self-employed people can't benefit from tax relief on pension savings||FALSE||37%||63%|
|If you are forced to retire early due to severe ill health, you can access your pension early||TRUE||43%||57%|
|Workers can not contribute to their pension while on parental leave||FALSE||44%||56%|
|Money invested in a pension tends to grow at the same rate as you would get in a savings account||FALSE||48%||52%|
|If you save into a workplace pension and your employer goes bust, you will lose all your money invested in the scheme||FALSE||51%||49%|
|There's no benefit to contributing more into a pension than the amount your employer will match||FALSE||60%||40%|
|If your employer automatically enrols you into a pension scheme, you don't have to worry about not saving enough||FALSE||65%||35%|
|You can leave money to grow in pension schemes until you need to access it||TRUE||67%||33%|
|People can start saving into a pension as soon as they have started working, whatever their age||TRUE||78%||22%|
Source: Money and Pensions Service, October 2019
The Money and Pensions Service (MaPS) was set up to combine the various government bodies that dispense help and information to the public about financial matters and was formed of the Money Advice Service, Pension Wise and the Pensions Advisory Service.
Ms Siarkiewicz adds: “You can speak to a pensions specialist for free, confidential help by contacting the Pensions Advisory Service helpline or webchat.”
MaPS offers the following top tips to avoid pensions blind spots:
- Continue to make contributions to your pension while on parental leave. Check with your employer how this will work. This will vary depending on whether you’re part of a defined contribution scheme or defined benefit scheme.
- If you’re suffering from severe ill health and wondering what your options are to access your pension, talk to your pension provider. They will be able to explain whether you are eligible to access your pension early
- If you are self-employed, you could receive tax relief on the amounts you put into your pension so it’s worth making contributions if you can. Further support for self-employed people with their pensions is available through the Pensions Advisory Service who offer a specialist telephone-based appointment service.
- For free, confidential help from pensions specialists call The Pensions Advisory Service helpline on 0800 011 3797 or visit www.pensionsadvisoryservice.org.uk
Saving into a pension
Whilst the answer you gave to the last question is quite true...it is also misleading. You can, in theory, start saving into a pension on the day you were born; this is because anyone without an income can save up to £3,600 per annum into a pension fund.
How can I find out how much my small final salary pension will grow?
I wished to draw my full differed pension ( from the Gov Works and Pension Dept.)now I am 72 yrs of age, I have been told I can't claim it until I have received my first pension payment, then I still have to wail three weeks then they will send me a letter with the my options on ways to claim and deal with tax. (I require the money now to purchase a new car). Is this correct and if so where can I find the answer?
When I retire at 66 I will receive a state pension however how does this work being a married man and my wife is ten years younger. She is Thai but now british citizen. In 2012 we had a serious car accident whilst working in the care sector as this was her full time job and my partime job as I already worked full time elsewhere. My wife never went back to work due to spinal and sciatica problems and constant pain. She was awarded Middle rate PIP and I was too although mine went down lower rate many years later. We both still on medication for pain. I am still working but feel it is getting to much as I work as a duty manager in a hotel on 4 × 10 hour shifts and gave up my partime job two years ago due to pain issue and feeling tired more as I am now nearing 60 in Jan 2020. Looking at a franchise to work for myself and will allow me more time with my family. Will my state pension cover my wife and what would if I die would she get my pension. I do pay for life insurance for both of us.