If your employer provides a pension scheme for you, the chances are that they will also offer a pension calculator to start this planning. Pension planning isn't just about planning for your financial future - there are lots of other things to think about. The fact is that you fall ill, lose your job, or have family problems the pension you're building up can come to the rescue.

What is a Pension Plan?

A pension plan [1] will provide an employee with a regular benefit payment upon retirement. This payment is made by the employer who established the plan. The main difference between a pension and other types of plans such as 401(k) and Individual Retirement Account (IRA) is that the employer, not the employee, makes contributions to the pension fund on behalf of the employees eligible for benefits.

How much should you put into your pension?

It's something that most of us are thinking about, but  are confused about how much to put into the pension pot, Should you pay off the mortgage or save for your pension?

The decision of whether you should spend your money now or save for the future is a real dilemma, but it's not as complicated as it would seem. You need to be putting at least 10% of your net earnings into your pension if you are under 40 years old. But if you want more professional financial advice, then you can always get help from experts such as Pension Times [2].

Is a pension worth it?

If you are asking if retirement pension plans are really worth it, then the short answer is yes. A pension plan is something that only a few have because it requires you to work for at least 10 years in the same company. Even if you think it's not worth it, imagine yourself during your old age without any savings and relying on charity, the health care system or the government. Nobody wants to live like this - no matter how old they are. So, why not to participate in the offered pension plan to ensure a better future?

What does Pension Auto-Enrolment mean?

When these programs are working well, pension auto-enrolment (PEA) is a way you can contribute to them automatically, without thinking about it. A PEA program allows you to contribute at least 10% of your pay to a retirement plan, usually a 401(k) or IRA, but in some cases to a 403(b) plan. No matter how much you put in, your employer and the retirement plan of your choice will add at least 10 % more.

How do I get an inexpensive pension?

Your pension will be affected by your age, but it is also determined by the exact plan you are on. Some pension plans change while others stay the same over the years. Therefore, it is crucial to ensure you understand which one you have and whether there are any changes to know about.

The higher your salary, the bigger your pension. Also, logically, the more money you have paid into your pension fund during your working life, the better your pension will be. However, if you want a pension that only requires you to contribute a smaller regular sum, that will be determined by your current location and the pension plans available. So, research the available offers and see which one works for you and is acceptable by your employer.

Conclusion

Pension plans have become part of the fabric of modern life. But most of us have almost no idea how they work. They are supposed to be simple, but in truth, they can be highly complicated. Luckily, this article has explained all you need to know to choose a plan that suits your needs.