Many people hold off on starting a pension until later in life, but that isn't always a good idea.
New reforms to pension taxation could prompt many to move to ISAs, however there are still many benefits to paying into a pension. Simon Lambert explains the advice he gave to his sister over on This Is Money.
Reluctance to Save
Simon’s sister was reluctant to pay into a pension as she couldn't afford extra money going out of her wages each month. She was also unsure that it was a priority at this stage in her life. His advice was not to think of a pension as a separate expenditure each month, rather an essential part of her monthly spending along with bills and rent.
Why Should You Save?
Simon gives three reasons why it’s a good idea to start saving into a pension as early as possible. These are:
- you get used to that money going out
- you take advantage of the free money your employer gives you and the tax relief
- the power of compounding (gains on gains) means ten years makes a massive difference.
For more information on the benefits of paying into a pension, view the This Is Money article here.