Managing My Money

Week 7: Pensions and Saving for Retirement - Part 1, Episode 13

Share Radio & Open University Business School

'The goal of retirement is to live off your assets - not on them'.

Frank Eberhart

Welcome

to Managing My Money presented by Glen Goodman and Annie Weston

What is a pension?

Regular payments in your old age to keep you going - but:

When you're young they sound dry and stuffy - and no-one talks about pensions, do they?

Time to find out more ..

Basic State Pension

• 'State Universal Pension' was introduced in 1908, flat rate pension in 1948
• National Insurance payments build up eligibility
• Costs are rising as people are living longer, so - it makes sense to put extra aside beyond the state pension ..  

Simon Rose

Share Radio presenter Simon Rose explains how workplace pensions are taking the place of the occupational schemes which are being steadily phased out

Workplace pensions

have been introduced in all companies without an occupational scheme. Employees are automatically enrolled for a combination of:

• their employer's,
• their own, and
• the Government's

contributions unless they opt out.

Defined Benefit

• The pension you receive relates to your salary: either final salary or average salary
• Your entitlement is also linked to the number of years you've worked for the company
• The norm in the Public Sector, increasingly rare in the Private
• In the Private Sector, companies must pay money in to fund their pension scheme. The Public Sector schemes are generally paid out of current taxation.  

Defined Contribution

• The pension you receive depends on the return on your and your employers' accumulated contributions
• The investment risk is therefore yours, not your employer's
• Your contributions are made from your earnings before tax
• The new workplace pensions are defined contribution, not defined benefit 

More detail on different types of pensions

The impact of final or average salary-linked schemes 

Use the Financial Planning Model to check your pension

Calculate your pension needs -

follow the link to the Age UK Calculator from MMM resources

Juggling with your retirement age, your ability to save and investment returns

- planning ahead is vital in this area of pensions: your choices could be -

• Save more now
• Live on less in retirement, or
• Work longer in old age

Next:

Listen to Part 2 of Week 7 on Share Radio - then take the Week 7 quiz/test. As you take each week of the course, your results will build up on your personal dashboard.

Managing My Money

is broadcast by Share Radio and is based on the Open University Business School online course of the same name.

Your presenters are Glen Goodman and Annie Weston.