Workplace Pension UK | Pros and Cons | GET FREE MONEY FROM YOUR EMPLOYER!
Channel: Financial Madness
Date: 2020-10-26

The type of Workplace Pension discussed is the "Defined Contribution Scheme"

Pensions to most people is quite an alien subject or it is considered to be an issue for when you are reaching retirement age. But this could not be further from the truth, you will doing yourself a great favour if you start your pension planning as soon as possible. 

PROS:
▶Free Money
The main benefits of the Workplace Pension is that your employer will also contribute to your scheme.  

▶Not relying on the State Pension
Please do not rely on just the State Pension to fund your retirement. 
So think of your State Pension (if its still around), as a supplement to your Workplace Pension which you can currently access at 55 (changing to 57 in 2028).

▶ Tax relief.
You do get Tax Relief/Government Top Up if you contribute to your Pension now. This is down in either of the two ways.
"Relief at source"
"Net Pay Arrangement"

▶Control over how much money you will have when you retire

▶ Flexibility when you can with withdraw your money

CONS
▶Your money is LOCKED away
This is probably the biggest disadvantage. You are locking your money away until you reach pension age. 

▶Risk of poor returns
As with any investment,  there is an element of risk involved and Pensions are no different. There is no guarantee that your investments will perform well in the market and there is a chance that the value of your pension will be less than the money contributed. 

▶Focus on high debt 
As you are automatically opted-in you will have to jump through some hoops to opt out of the scheme. This can be necessary for those struggling with debt. Particularly debt with high interest rates.

Chapter Information:
0:00 Introduction
0:29 Pension Basics
2:00 Pro: Free Money from your Employer
3:04 Pro: You don't rely on State Pension
4:48 Pro: Tax Relief
7:45 Pro: Control over Pension Pot amount 
9:10 Pro: Flexibility on accessing your Pension
11:20 Start ASAP
11:53 Con: Your money is LOCKED AWAY!
13:56 Con: Risk of poor returns
14:57: High Interest Debt should be priority 


▶Financial Madness - What is Compound Interest?
https://www.youtube.com/watch?v=YjamLZ8lBlc&t

▶Financial Madness - Investing in Index Funds for Beginners?
https://www.youtube.com/watch?v=g_zNleL3mIc

▶Financial Madness - ISA Accounts Explained 
https://www.youtube.com/watch?v=PMRA8Q7IMNw&t

▶Yahoo Finance - Hargreaves Lansdown Findings
https://uk.finance.yahoo.com/news/one-worrying-stat-when-it-comes-to-brits-paying-off-their-mortgages-093332505.html?

▶Money Advice Services - Pension Calculator: https://www.moneyadviceservice.org.uk/en/tools/pension-calculator/info

▶Aviva - Pension Annuity Calculator: https://www.direct.aviva.co.uk/myfuture/PensionAnnuityCalculator/YourChoices

DISCLAIMER - Any advice or (statements perceived to be advice) given in this video and any other videos on my channel are for information purposes only, and does not act as financial advice.  Your  are fully responsible for your financial decisions. If you are in need of Financial Advice, please seek out a professional advisor. If your are unsure on how to do this, feel free to reach out to me and I am more than happy to guide you.

#Pensions #DefinedContributions #WorkplacePension