• Rachael Panteney

Do you struggle to understand pensions?

You may be thinking "What is a pension?" A pension is money you get when you retire. It is designed to replace the income you would get from working.



There are many types of pension:

The State Pension. This is paid by the Gov at State Retirement Age (currently 67). This is based on the National Insurance you have paid during your working life. Currently, the max weekly amount is £175.20


Auto Enrolment. In 2012 the Government introduced Auto Enrolment. If employed, aged over 22 and below 67,and earn more than £10,000 per year then your employers must set up and pay into a pension for you, which you also pay into. If between 16 and 21 or over state retirement age, and earn between £6,240 and £10,000 then you can "opt in" to the workplace pension.

Remember, an Auto Enrolment pension is as well as the State Pension, not instead of it.


Personal Pension. You can also set up your own personal pension. This is a way of saving money to add to your retirement income.


It is never too early to pay into a pension. Ideally you would get into the habit of paying into your pension as soon as you begin working.


There are additional bonuses to saving in to pensions:

Tax Relief. The Gov want to encourage people to save into pensions. So to do this they will pay a bonus on top of what you pay in, which is based on your tax band. If you are a basic rate taxpayer (someone earning less than £50,000 per year) then Gov will pay an additional 20% into your pension. So if you pay in £100, the Gov pay £20 on top. Higher rate taxpayers may be able to claim a further 20% via self assessment.


Money in a pension is invested, rather than being held in a bank account. If invested in the right place the value can grow and grow meaning it is worth a lot more by the time you retire. With investing there is always risk involved, and you should only take the level of risk you are comfortable with, as investments can fluctuate, meaning the value goes down as well as up.

Get in touch for more info.


The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.

Tax treatment varies according to individual circumstances and is subject to change.

Rachael Panteney

Financial Adviser

Willow Tree Financial Services

01323 436680

rachael@willowtree-fs.co.uk