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Pensions are one of the most important things to build up when you’re of working age, but many of us don’t even think about them until the time comes to claim them.

Think of a pension as a type of long-term savings plan (actually, that’s exactly what it is). It’s one of the most tax-efficient ways to save money during your working life – the earlier you start putting into your pension, the more financial benefit you’ll see when it comes to retirement.

If you live and work in the UK, there are three main ways you can build up a pension to help give you an income when you retire…

1. State Pension.

This is a regular payment from the government that you can receive when you reach the State Pension Age (this depends on when you were born but it’s currently set at 66 years old).

The amount you get depends on your National Insurance record – you need a minimum of 10 years of contributions to get any State Pension amount, and at least 35 years of contributions to get the full amount, which is £179.90 a week for the 2021/22 tax year.

Good to know: If you’re self-employed, you’re entitled to the State Pension in the same way as anyone else. Read more here.

Receiving your State Pension doesn’t happen automatically once you turn the State Pension Age – you’ll need to claim it.

No later than 2 months before you reach the State Pension Age, you’ll receive a letter from the government telling you how to claim your State Pension. There are various ways to claim:

For more information about the State Pension, click here.

2. Workplace pension.

This is a separate way of saving for your retirement that’s arranged by your employer. Most employers automatically enrol their staff into workplace pensions, and they also pay into it for you…

Every payday, a percentage of your pay is put into your company’s workplace pension scheme automatically, and in most cases, your employer also adds money into it as well.  On top of this, your workplace pension contributions get a tax relief from the government.

Let’s say you contribute £10 a month to your workplace pension:

  • The government will add £2.50 as tax relief
  • Your employer will usually contribute at least £7.50
  • From your original £10 investment, you see a total of £20 invested

Unlike a State Pension, the minimum age you can withdraw your Workplace Pension is 55.

For more information on Workplace Pensions, click here.

3. Pensions you set up for yourself.

If you’re not employed or don’t have access to a workplace pension, you can set up your own. If you already have a Workplace Pension and want to save more for your retirement, you can do this, too.

A personal pension is a tax-efficient way to save for retirement where you choose the provider and make arrangements for your contributions to be paid.

Similar to other pensions, you’ll get tax relief on your contributions (usually taking up to 25% of your pension pot tax-free) and can normally access your personal pension pot from age 55.

For more information on Personal Pensions, click here.

Calculating your pension at retirement.

The amount of income you get when you retire will depend on the size of your pension pot/s and how you choose to withdraw from your pension at that time.

Head over to Money helper’s Pension Calculator to get a forecast of the likely pension income you’ll receive when you retire.

It’s never too late to start.

When it comes to savings for retirement, the earlier the better, but don’t let that discourage you; every positive financial step you take towards retirement is beneficial.

Whenever you plan to retire, having a little bit of savings in the pot can make all the difference, both financially and psychologically. The last decade before you reach retirement is arguably the most important, but by then you should have a fairly good idea of when you’d like to retire and still have some time to make adjustments, if you need to.

We know that times can get tough, and we’re here to support you.

If you’re struggling to manage your finances, get in touch with our team on 0161 837 4000, or email us at

If you’re not quite ready to speak to someone just yet, head to Advice Online, our fully digital financial advice service that lets you find out which solutions you’re eligible for.

Together, we can live better.