How to plan for your pension as a millennial

For the millennials out there, paying into a pension plan may seem like a waste of money that would be put to better use in the here and now.

After all, the state pension age in the UK continues to move further away, which could lead some younger adults to become disillusioned with the prospect of putting their hard-earned savings aside to fall back on later in life.

However, the long-term benefits can far outweigh the negatives if you create an appropriate strategy around how to pay into your plan. Data from the Office for National Statistics suggests that 76% of UK employees were members of a workplace pension scheme in 2018 – a figure that represents a 29% rise from 2012, when automatic enrolment was first introduced.

The numbers suggest that more and more people are recognising the wisdom of building up a pot of money for when they reach retirement, so how can millennials ensure they do not miss out?

Enlist the services of a professional

The world of pension plans and all their associated rules and regulations may seem daunting and complicated to many, which is why it can prove prudent to hire a professional to offer impartial, expert guidance on the best approach for you.

A qualified adviser can help you to understand all your financial options, identifying any risks you may wish to avoid as well as pointing out opportunities that can be taken advantage of.

Capitalise on employer contributions

A lot of companies will offer workplace pensions, which you can enrol in and therefore boost your savings pot thanks to contributions from your employer.

There may be a sliding scale of how much they put in, which may depend on your length of service or the amount that you contribute from your own salary, so it’s important to be aware of these conditions and try to maximise the benefits as well as you can.

Keep track of your payments

Of course, if you move jobs or earn a promotion, your circumstances are likely to change, which in turn may alter your payments into your pension plan.

It’s worth regularly reviewing your situation and, if required, checking in with your adviser to make sure you are getting the most from your scheme to help safeguard your future.

Consider consolidating your schemes

Throughout your working life, it’s possible that you will enter more than one pension scheme. If that’s the case, keeping track of all of them can prove difficult and confusing, and it may be worth moving your money around and consolidating into one pot.

However, it’s worth remembering that some schemes produce greater yields than others, so keeping some savings in a separate plan may prove a practical decision.