The big guide to pensions

Our latest guide looks at pensions, to help you understand how you can prepare for retirement (even if it seems a long way away!)

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It’s also worth knowing that compound interest means that the earlier you start saving into your pension, the more interest you should earn overall.

This is a really important point!

Because of the huge effect of compound interest it is often said that you should pay into your pension a total (between you and your employer) the % of half your age at the point you start it.

So if you were 20, you would pay in 10% of your salary (between what you pay and what your employer tops up) per year from then forwards.

However, if you started at 30 you would have to pay 15% every month to have the same effect, as you miss out on 10 years of compound interest.

Thanks for a really helpful post, there was lots of other detail you don’t often see in one place :grinning:

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Great article - is there any more detail on the £21,770 figure quoted?

The other thing that I think is an interesting way of thinking about annuities and other financial products that you can buy with your pension pot is that they are an insurance against dying old(-er than average)

I have recently started a new job with a different employer which means I have two distinct pensions. First one should have 7-8 years worth of my and my previous employers’ contributions. What are people’s views on combining them? Is combining pensions purely an administrative issue, i.e. it is easier to manage? or are there other benefits?

I have no idea what to do here, whether combine or just leave them.

I asked for advice when i changed jobs and i was basically told it depends on the management fees.

If the previous one has cheaper management fees, leave it there, if the new one is cheaper, move it over

This is very generic though. Other considerations, if you wished to make them, would be performance of the investments or if you have access to choose which investments are made. I have the option to choose my own investments but prefer to leave it up to the ‘experts’

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