Recent graduate about to start new job..should i get a pension?

maple1_2

I have recently graduate from university and have been offered a job starting in september 09. The job offer comes with a pension if I choose. Having no previous knowledge of pensions, I have no idea if, given the current economic climate, it is the way to go. Ideally I would like to save some money every month from my salary.
Can anyone advise me on what is the best option?

Thanks

dunstonh

I have no idea if, given the current economic climate, it is the way to go.

The current economic climate has no impact on pensions over the long term. If anything, it is benecifial for money purchase schemes where regular contributions are being made and redemption is not due in the next 5 years.

Can anyone advise me on what is the best option?

You havent told us the options. What is the pension? What are the explicit benefits of it (e.g. final salary scheme or money purchase with employer contribution etc)?

Planning for your retirement is easy and affordable for everyone. As long you start early enough. The longer you leave it, the more it will cost and the more likely you will have to plan to live on £4700 a year state pension plus whatever little money you have saved up.

Count_Dante

maple1 wrote: »

I have recently graduate from university and have been offered a job starting in september 09. The job offer comes with a pension if I choose. Having no previous knowledge of pensions, I have no idea if, given the current economic climate, it is the way to go. Ideally I would like to save some money every month from my salary.
Can anyone advise me on what is the best option?

Thanks

Most money purchase schemes allow you to choose to invest in low risk investments (such as government bonds) as well as shares. If you were truly squeemish about risk you could put your money in government bonds and enjoy the tax benefits of a pension without the risk of shares, then tranfer to shares later if desired. However, shares tend to outperform government bonds in the long run so you are probably better off in shares to start with.

JayZed

You should definitely be making retirement provisions now - as Dunston says, the longer you leave it, the more expensive it becomes and the more likely it is that you'll have an impoverished retirement. Seriously, do it now - I dearly wish that I hadn't waited as long as I did to start making pension provisions.

Whether you join your new employer's scheme depends on the details of the scheme. If it's a private-sector employer, it's almost certainly a defined contribution (money purchase) scheme. Assuming this is the case, does your employer make payments into it - i.e. match some or all of your contributions? If so, then you should go for it, as this is basically free money.

The current economic climate is likely to work in your favour, as shares are relatively cheap now. At your age you can afford a higher-risk (and potentially higher-return) portfolio invested mainly in equities. As you get older you'll want to shift gradually to lower-risk investments (bonds etc).