Top 10 reasons to save
There's lots of reasons to save towards your future, and we've listed the top 10 of those below.
Being part of the Morgan Sindall Retirement Savings Plan is like getting a payrise.
It’s just that you won’t see that money until you come to take it later on in life, rather than having it in your salary right now. Alongside your contributions into the Plan your employer will pay a contribution too. It could be as much as 5% of your salary which is paid in by your employer every month.
Your contributions and where you choose to invest them are key to making your money grow.
Although you may join through automatic enrolment on the minimum contribution level set by the Government, it’s a good idea to review this regularly and make sure you’re paying enough into the Plan to get the most out of your employer’s contribution and to save enough for your future.
It's a good way to make the most of tax advantages.
Saving into a pension is very tax-efficient as long as you stay within the limits set by the Government. So you get tax relief on the money you pay into the Plan (which means in effect it costs you less) and if you pay your contributions through pension salary exchange then you also make savings on your National Insurance contributions.
You get a quarter of your life savings tax free.
When you come to take your money (which could be from the age of 55 onwards) you can take 25% as a cash lump sum which is tax free.
You have a choice about how to take your money from age 55 even if you haven't stopped working.
You can choose to use your pension Account to buy a guaranteed income (with or without a cash lump sum) or you can continue to invest your money and draw from it gradually as and when you need it.
The money you have in the Plan is yours, even if you leave your employer.
As long as you have been a member of the Plan for more than 30 days you will either have your contributions refunded to you or you could transfer the value of your pension Account to another pension or leave it to continue to be invested in The Morgan Sindall Retirement Savings Plan. So whichever you choose you won’t lose out even if you leave.
Saving could help you keep child benefit.
A family where one person earns more than £50,000 starts losing child benefit – which is worth up to £1,752.40 a year for two children. Saving into a pension could help you keep this. The taxman uses a little-known calculation called your ‘net adjusted salary’ to work out if you are entitled to receive child benefit. This is your pay before tax, minus your pension contributions. So normally someone with two children who earned £53,000 would lose £525.72 of child benefit. By paying £336 a month into their pension their net adjusted salary would be £48,968 – so they’d get to keep all the child benefit.
Your family gets some money if you die.
If you die before you retire your family or your beneficiaries would receive the value of your pension Account as a lump sum as well as the life assurance benefit that is explained in your Employment Letter which your received when you first joined the Company. Some employees are also eligible for a dependant’s death in service pension.
Your money is locked away so you can't spend it.
There’s always a temptation with savings to use them before you intend to. This is fine for short-term savings intended for a holiday, a new car or even the deposit on a house. But when it comes to making sure that you have enough money to live on in retirement it’s essential that you keep on saving for as long as possible so that your money has time to build up and provide you with some extra money to live on. That’s why currently you can’t get access to your retirement savings until the age of 55.
It's a struggle to get by on just the State pension.
Most people will receive a State Pension. This is now a flat rate pension which for 2019/20 would provide you with £168.60 a week – that’s just £8,546.20 a year (this is the maximum amount of State Pension you can receive and depends on the number of years you've paid National Insurance Contributions for). Compare this with what you currently earn and think about whether or not this would be enough for you in retirement. Even though you probably won’t need as much income in retirement as you do now, it will help to have some extra income from your savings on top of the State Pension.