Arena Magazine 2006 Issue 4 Autumn Arena

Getting to grips with pensions

You may not be interested in pensions but ask yourself this – Do you want to retire into poverty?

Obviously not - so it is vital that you use your Usdaw membership to give yourself all the information you need to make an informed choice on your pension options.

That's why Usdaw has launched a new web site www.usdaw.org.uk/pensions dedicated to demystifying the complex world of pensions.

"The site is run by the union's own in-house pension experts who have extensive knowledge of the pension world," said general secretary John Hannett. "It will help members who want to know what to expect when they come to retire and, if there are any changes to their pension scheme, what it will mean for their retirement.

"The Government says that a staggering 4.5 million people who work for employers that run pensions schemes do not save in them. Company pension schemes are often the best option for workers and our site will be encouraging our members to sign up once they have investigated, via the web site, how good or bad the scheme is.

"This site will allow them to access a whole range of information from the very basics about how their own pensions work to the latest information on changes the Government are proposing to state pensions that will impact on Britain's workers."

Also on the pensions section you will find information on; starting a pension, the state and occupational schemes, news, links to other useful sites and you can also submit a question.

Q. I'm 25 and have just started work. Retirement seems a long way off. I don't earn much but have the option of joining the company scheme. What should I do?

A. The younger you start contributing to your pension the less it will cost you in the long run. For example if you want to retire with a pension of around half of your earnings at 65, you need to save around 11 per cent of your salary for 40 years. This ideally will be part of an occupational pension scheme made up of a contribution both from you and your employer. If you were to leave paying into a pension until you are 40, you will have to contribute a much larger 23 per cent of your salary for 25 years.

Did you know

• On average, British men will live for 20 years after retiring at 65, whereas women are expected to live until they are 90. In 1950 a 65 year-old man was expected to live to the age of 77.
• Rising life expectancy has coincided with falling birth rates in the UK. For example: In 1950 there were four people of working age for every one pensioner. By 2006 this figure had fallen to 2.7 and by 2050 is expected to fall further to around 1.1.
• While 87 per cent of recently retired men get the full basic state pension, the corresponding figure for retired women is only 30 per cent.
• Poor stock market returns have seen many companies either close or change their more generous final salary pension schemes in favour of less generous alternatives.

Want to learn more?

Once the courses are up and running you will be able to sign up on the web site. If you want to put your name down now you can send your details in to the pensions section at Usdaw's central office.

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