Time is on your side
The illustration below shows just how much difference it makes when you start saving and investing early – even if you put in the same amount in total as someone who starts much later.
Consider David and Mike. David starts investing £100 a month when he’s 25; Mike invests £200 a month from the age of 45. By retirement, both have saved the same amount (£48,000). However, assuming both their investments grow at 5% a year, David ends up with almost twice as much as Mike simply because his money is invested for longer.
Source: Fidelity 2017
Reasons to start now
What you can do now
Maximise your employer contributions – for your workplace pension, try to contribute whatever it takes to get the maximum employer contribution.
Consider additional voluntary contributions to your workplace pension – if you want to pay more into your workplace pension, you can pay in and get tax relief on anything up to your annual limit of £40,000* or up to 100% of your earnings if that’s lower.
Getting a pay rise? – think about increasing your own pension contributions by the same percentage.
Consider investing to get the retirement you want - create your own portfolio. Just remember, of course, that the value of investments can go down as well as up, so you may get back less than you invest.
Bring your pensions together – depending on the types of your other plans, you may be able to transfer these into your Fidelity plan. This could mean less paperwork and, with your accounts in one place, possibly a wider choice of investments. More about transferring in
*Tax relief is only available up to 100% of your earnings or £3,600 (gross) if that’s higher. If you contribute more than £40,000 (the annual allowance) in the 2018/19 tax year you may have to pay a tax charge, unless you have unused allowance from any of the three previous tax years. If you have earnings above £110,000 the amount you can contribute and get tax relief on may be lower (down to £10,000) and if you have taken taxable income from your pension pot, using the pension freedoms, this could be just £4,000. If you're paying pension contributions through a salary sacrifice arrangement, payments to your pot are treated as employer contributions. These are deducted from your salary before any tax or national insurance calculations are made which results in you having a lower taxable income.
The value of investments can go down as well as up, so you may get back less than you invest. Tax treatment and eligibility to invest in a pension depend on personal circumstances. All tax rules may change in future.
This information is not a personal recommendation for any particular product, service or course of action. Pension and retirement planning can be complex, so if you are unsure about the suitability of a pension investment, retirement service or any action you need to take, please call our pension service centre on 0800 3 68 68 68 or refer to an authorised financial adviser.
Pension money cannot normally be withdrawn until age 55.
Bringing all your pensions together
If you’ve built up a number of pension pots over the course of your working life bringing your pension plans together into your workplace pension could make them easier to manage. We won’t charge you to transfer to us, but please note there may be exit fees or penalties when transferring from your existing provider. Once you’re ready, you can log in to begin the process.
Advantages of transferring
- Having one provider means one set of paperwork, making it easier to manage your pension pot
- Access to our innovative services to help you manage and understand your pension
- A wide choice of funds and fund providers
- Potentially lower charges, with no charges for switching funds, to allow more of your contributions to work for you
- Fewer retirement restrictions, if your Fidelity plan offers more flexibility around your pension options
Things to consider
- The potential loss of any of your existing benefits including valuable guarantees.
- Keeping your pot below £10,000 could mean you are able to take it all in one go under the small pot rules.
- Check to see if there are any exit charges or penalties if you transfer out of your current plan.
- Remember there is no guarantee that transferring your pension will result in a higher retirement income.
- You cannot normally access your pension until you reach the age of 55.
It’s important to understand that pension transfers are a complex area and may not be suitable for everyone. Before going ahead with a pension transfer, we strongly recommend that you undertake a full comparison of the benefits, charges and features offered.
To find out what else you should consider before transferring, please take a look at our section on moving your pension. If you’re in any doubt whether or not a pension transfer is suitable for your circumstances we strongly suggest that you seek advice from an authorised financial adviser.