Four ways to undo damage recession did to your pension
Things seem to be looking up for men on the jobs front; the number of men signing on is almost half of what it was four years ago.
However, those who have returned to work since the recession hit should act now to undo any damage done to their pension during the downturn. Here are four steps which should get you there.
1 If returning to the workforce after a period of unemployment, join the company pension (assuming your employer offers one) and save as much into your pension as you can.
This will help you make up for the years of pension savings which you have missed. Pay Additional Voluntary Contributions (AVCs) if you can afford to.
Be careful not to save more into your pension than you can get tax relief on. You can get tax relief on pension contributions at your highest rate of income tax. There are limits to the amount of tax relief you can get on your pension contributions, depending on your age and earnings.
It makes sense not to exceed those limits, but to increase your contributions once you reach an age which entitles you to a greater amount of tax relief.
2 If you've got a few job offers or you're simply looking to change job, choose an employer who offers a company pension.
Ideally, go for a boss who also pays employer contributions into the pension on your behalf, as this will make it easier for you to have meaningful savings in your pension.
3 If the recent recession prompted you to stop saving into your pension, start saving again.
If you cut the amount you saved into your pension, undo those cuts if you can afford to do so and save more than you originally did to make up for the years you neglected your pension.
4 If you are self-employed, it is up to you to set up your own pension. Don't put it off any longer. You can start your pension by opening a PRSA (Personal Retirement Savings Account) or a personal pension plan.
As always, get independent financial advice before you do so.
It would also be worth your while checking where you stand on the State pension.
Sunday Indo Business