pensions: what to do if you haven't got one

Have you got a pension? If you haven’t, you could be worried about how you are going to afford to live when you retire. This article discusses what the options are if you don’t have a pension to fall back on during your retirement.

According to the Pension Policy Institute, not enough people are saving enough money to comfortably retire. It's something we're familiar with here at caba, with lots of people coming to us for advice on managing their debts and finances overall during retirement. 

Not having access to a company pension or being unsure about which pension package to invest in, as well as simply not having enough money to set aside each month, are among some of the reasons why people retire without the comfort of having a pension pot behind them. 

Other reasons for not having a pension include: 

  • being self-employed or unemployed 
  • living on a reduced income (working part-time) 
  • going bankrupt at some stage in your life 
  • experiencing health issues that prevent you from working and/or preparing for retirement 
  • requiring care or are caring for someone else 
  • supporting dependent children in later life 

how much do you need to save for a pension? 

There’s lots of guidance out there in relation to this all-important question, with HSBC Bank using this approach

When you start saving for your pension, halve your age, then use that number as the percentage of your salary you should aim to save each year.  

This formula means that if you start saving for retirement at the age of 20, you should aim to be saving 10% of your annual income towards your pension. If you start when you are 30, the figure will increase to 15%, and so on. 

Meanwhile, Citizens Advice say it’s important to create a pension planning checklist. It will enable you to think about and plan for the retirement lifestyle you want vs. your financial commitments. The cost of your home (e.g. your mortgage repayments), your partner’s expenses and energy bills are among the factors that form part of this important equation. 

what should you do if you haven’t got a pension?  

If you’re approaching retirement age and are worried about your financial situation, there are several steps you can take, including these three:  

review your situation 

It’s important you acknowledge that your situation is going to change. At the same time, it’s equally important you use the time leading up to your retirement to examine the impact it will have on you financially. 

Remember, the state pension is available to everyone. If you’ve failed to meet your minimal National Insurance contributions, you will be given a basic state pension of £130 that can be topped up. Use our benefits calculator to review how much state pension you are entitled to receive and identify any additional benefits you may be able to apply for. For more insight on benefits, read this article, ‘Understanding benefits in the UK: The basics - explained.’ 

reduce your outgoings 

Living on less money inevitably means you will have to review your lifestyle. Even small savings in your expenditure will contribute to an overall reduction in outgoings. Look into what adjustments you can implement to make sure your money goes further.  

This guide published by MoneyHelper also helps you work out how much money you will need when you are retired. It also contains advice on working out your likely retirement income and assessing your income options. 

continue to work 

More people than ever are choosing to work instead of retiring, with the number of working people aged between 60 to 75 having increased by more than 7% since 2001. Indeed, 28% of the UK working population are currently aged 50 or over. According to Government figures, the average age of the UK labour market exit has increased over the past two decades. In 2000, the average age of exit for men was 63.3-years-old, increasing to 65.2-years-old in 2020, an increase of 1.9 years. During the same time period, in 2000, the average age of exit for women was 61.2-years-old, increasing to 64.3-years-old in 2020, an increase of 3.1 years. 

The advantage of delaying taking your pension is that the longer you delay, the more your state pension will be worth when you do take it. According to The Money Advice Service, for every nine weeks that you defer taking your state pension, it increases by 1%. So if you defer by a year, you’ll boost your pension by 5.8%.  

how we can help 

caba are here to support you if you are an ACA student, an existing or former ICAEW member or a close family dependent. Whatever your financial worries, big or small, you’re not alone. We’ll support you so you can access the best options. 

We’ll listen and offer advice and guidance in a safe and supportive environment.  And if we aren’t able to help you ourselves, we’ll point you in the right direction to one of our partner organisations who can. Either way, we simply want you to access the best options quickly and easily so you can carry on.  

As an independent charity, we don’t disclose any of the information you share with us to the ICAEW or your employer. 

Get in touch with us today

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We support past and present members of the Institute of Chartered Accountants of England and Wales (ICAEW)1, ACA students2, ICAEW staff members3, and the family and carers of members and students4

  1. No matter where your career takes you, past and present members of the Institute of Chartered Accountants of England Wales (ICAEW) are eligible for caba’s services for life, even if you change your career and leave accountancy 
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