Not only will you benefit from employers contributing to your pension, but there are also additional perks. Currently, employers are required to contribute at least 3% of your salary, and in many cases, they will match your own contribution. As a result, the amount of money in your pension could potentially double, and this growth can be further increased through income tax relief that is claimed on your behalf, even before any investment gains are made.
Another tax-free advantage is that you can withdraw a quarter of your pension without paying any taxes once you reach the “normal minimum pension age”. Although this age is currently set at 55, it is scheduled to rise to 57 by 2028 and may even increase to 58 following any further state pension age increase.
In most cases, individuals do not get to choose their pension provider. Instead, they automatically join the scheme selected by their employer. Some of the largest pension providers are Fidelity, Legal & General, Now: Pensions, Nest, Aviva, and The People’s Pension.
If you don’t actively decide on where to invest your money, your pension will be put into a “default” fund. The returns on your savings will vary based on your age, as the professional investor managing your funds is likely to take more risks if you are younger.
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