“Pension”
Pension: It is a plan that aims to have some money to live on when you are old so that you don’t have to work until you drop dead, especially bearing in mind that a 25- yr old woman’s average life expectancy is now 91, and she has a 19 percent chance of reaching one hundred., at which point she probably does not want to be working anymore.
When you start saving up to eighties, and nineties, while they are young and earning money, you will start receiving benefits in the form of the ‘State pension’ when it deems you of retirement age- an age that it sets, and which is creeping ever upwards.
State pensions are solid out of compulsory tax you pay throughout your working they are your working life, known as national insurance. If you do not pay enough national insurance you do not get the state pension. This national insurance does not go into an account that is left untouched until your retirement. It is added to the government coffers each year, like all other tax that you pay. That is why people refer to the state pension as a Ponzi scheme, which is where whoever owns the scheme generates returns for established investors.
The government also encourages you to save for retirement before you stop working, through supergenerous tax breaks to enable you to accumulate a private pension.
Private pension
All the income of just over a year ( or whatever the equivalent sum will look like in forty years’ time after inflation) is probably as good as it’s ever going to get.
Workplace pensions
Auto-enrollment, another way the government is trying to nudge us into accruing enough, means every employer must help all of its employees over the age of twenty- two and earning at least £10,000 to save into a private pension scheme. The law sets minimum contributions each year, that is the amount that is annually paid into the pension scheme, a giant pot of money that you and your colleagues will be able to dip into when you all turn fifty- five. From April 2019, the contribution will be 8 percent of your earnings, that is 4 percent from you, 3 percent from your employer, and 1 percent as tax relief.