Retirement Planning and Pensions

Even if you’re not thinking about retirement yet, your future self is counting on you.

When life’s been about surviving the week, retirement can feel like it lives on another planet.

But your pension isn’t just about old age.

It’s about options.

It’s what gives you freedom and peace later down the line.

This chapter breaks down what pensions are, how they work and what small steps you can take now (yes, even if you’ve had gaps or are starting over).

The Three Main Types of Pension

Type	What It Is	Who It’s For
State Pension	Paid by the government if you’ve got enough NI contributions	Everyone who qualifies (10 years minimum, 35 years for full)
Workplace Pension	Set up by your employer; taken from your wages	Anyone employed (if you earn £10,000+ a year)
Private/Personal Pension	One you set up and pay into yourself	Good for freelancers, carers, part-timers, or topping up your pot

What’s Auto-Enrolment?

If you're employed and earn over £10k a year, your employer must put you into a workplace pension (unless you opt out).

It’s called auto-enrolment.

• You put in 5%, they put in 3%

• You can add more if you want to

• You get tax relief on whatever you pay in

If you opt out, you stop building up that pot — so think carefully.

Sometimes people opt out because they need more take-home pay now, but it’s worth weighing up the long-term impact.

What Happens If You’ve Had Gaps?

Maybe you’ve taken time off for your health.

Maybe you’ve been caring for someone.

Maybe work just hasn’t been steady.

That’s real life and pensions should reflect that.

The good news?

You may still be building up your State Pension through NI credits.

Check your record at gov.uk/check-national-insurance-record to see if you're covered and if not,

ask about voluntary contributions.

What’s Compound Interest? (And Why Should I Care?)

Compound interest means the earlier you start saving, even if it’s a small amount, the more it grows over time.

It’s interest on top of interest.

Let’s say you put in £50 a month in your 30s even if you stop at 50, your pot could be bigger than someone who puts in £100 a month starting in their 40s.

It’s not about having loads.

It’s about starting where you are and being consistent.

You’re not behind.

You’re building forward.

Your pension isn’t just for “later.”

It’s a way of telling your future self: I’ve got you.

Whether it’s sorting your NI credits, staying in a workplace scheme or setting aside a tenner a month, it all counts.

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