Martin Lewis urges savers to put money into this pension scheme offering generous perks
MARTIN LEWIS took several questions on This Morning today but in a rare change from the norm, he also answered a question from Eamonn Holmes. In his response, the Money Saving Expert implored people to look into their pension arrangements.
Martin Lewis advises savers on investing in their pension
Martin Lewis, 48, took questions from viewers today on all things coronavirus related. Many of the queries were centred on travel and the insurance issues associated with it but Eamonn stepped in to also seek answers on broad financial concerns, including mortgages and pensions.
Eamonn commented on the unfortunate reality of low interest rates.
He noted that anyone with a “few quid” in a savings account is likely actually losing money when taking inflation into account.
Martin was asked for what his “instincts” were for people with a pot of money and what they should do with it.
Specifically, Eamonn asked if the money should be put into property or a pension for example.
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In his response, Martin detailed that there “are no right answers” due to the complexity of financial arrangements.
However, he did go on to highlight that he is a big fan of pension auto-enrolment rules and he implored savers to look into this option: “If at all possible, get the maximum in that employers will match.
“Because then you get the tax benefit of a pension and you get employer’s matching it.”
Martin then went on to calculate how this could be beneficial in monetary terms: “For some people, you can put in £80 a month and you’ll have £200 a month saved into it for retirement."
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He went on to provide somewhat of a warning into putting money into property, noting ironically that “property isn’t as safe as houses”.
Automatic enrolment rules were introduced from 2012 and all eligible workers should have been enrolled in an employer’s workplace pension scheme by February 2018.
To be eligible for automatic enrolment, an employee must be:
- At least 22 years old
- Below state pension age
- Earning a salary of at least £10,000
- Normally working in the UK under a contract of employment
Workplace pensions are set up by employer’s and are designed to boost funding levels for private pensions.
They can come under many names including occupational, works, company or work-based pensions.
In basic terms, they work by having a percentage of the employees pay put into the scheme automatically every payday.
In most cases, the employer will also add money to the scheme for their employees.
It should be noted that while joining a scheme is usually done on an automatic basis, it is possible to opt out if desired.
If a person opts out of the scheme within certain time limits, they’ll get their contributions returned to them.
It is possible to opt out at any other time but both the employee’s and employer’s contributions will remain in the pension scheme.
A person opting out of a pension scheme may miss out on valuable benefits (such as tax perks) and as such, careful consideration should be given before any action is taken.