Understanding Auto Enrolment, Pensions and Annuities

There is a demographic ‘time bomb’ ticking currently with pensions and no one knows when it will explode. What we do definitely know is that people are living longer and that the working population that pay for all our pensions through National insurance contributions, is getting smaller.

This points to one undeniable fact and that is we need to take responsibility for building our own pension fund to form an annuity which will provide income in retirement as the government is unlikely to be able to look after us to the level we expect in our old age.

What is a Auto Enrolment?

Auto enrolment was introduced by the Government in 2012 and is often referred to as the ‘Workplace Pension’.  If you are an employer, even employing just one person, you are probably already aware of auto enrolment and your legal responsibilities for setting up a Workplace Pension.  This is a step towards helping over 7 million employees to start to save towards their retirement and it is mandatory.   It is not simple and there are several things to consider? How much time will it take each month to administer?  Which of your employees are eligible?  Do your employees need their workplace pension to be portable?  Have you got the time to spend setting up the Workplace Pension?  Bow House offer a simple, flexible, easy to manage scheme for employers, large and small and we are just a phone call away.

Depending on the number of people you employ, you will have a staging date which is the date that your scheme needs to be in place.  You may already have a Workplace pension in place, but you might have found that the administration is cumbersome and time consuming.  Perhaps you would like to review your options?  We make sure that your scheme complies with the rules and that it doesn’t become a burden on you and your staff to administer.  To find out just how easy we can make setting up your scheme, just call us on 01635 248 068, or call Andrew Benson on 07900 880 995.  There is no charge for a no obligation initial meeting.

What is a pension?

A pension or a retirement savings plan is a long-term investment (ten years or more) that aims to build a fund for your retirement in a tax efficient way. This can be used to provide you with an income (annuity) when the pay packets stop – your pension will effectively for many of us become our ‘pay packet in retirement’.

Why do you need a pension?

When you retire, your pay packet will stop. What will you live on, how will you pay the bills? Is the State Pension going to pay you enough? Will it cover all the bills? We have grown used to holidays – to entertaining – to keeping warm. In 2013, the basic state old age pension pays a maximum of £110.15 per week and this might be subject to tax. You might also qualify for the Additional State Pension, or a Pension Credit. This pension can start to pay out when you reach state pension age. State pension age used to be a set age, now your state pension age is calculated on a sliding scale. Even with the maximum state provision, this will probably not be enough for most people. So . . . you need to seriously consider making your own provision to top-up what you will receive from the State. How can you do this?

The office of National Statistics record that in 2011, the statistics for England and Wales for people dying in retirement were:

Age 65-74

78,581 deaths

46,144 males

32,447 females

Age 75-84

143,422 deaths

74,171 males

69,251 females

Age 85-94

150,236 deaths

58,038 males

92,198 females

Age 95-99

25,004 deaths

5,912 males

19,092 females

Age 100-109

4,851 deaths

727 males

4,124 females

Age 110 & over

12 deaths

1 male

11 females

Source: Office of National Statistics

This introduces several questions:

  • If you reach the age of 85, how much income would you like to receive each year in todays terms and where is that income going to come from?
  • Females are much more likely to live to a greater age than their male counterparts. Where is their income going to come from if their partner has died?
  • If you haven’t started to plan your pension yet, is it too late? Is some extra pension better than nothing?

The younger that you start to ask yourself these important questions, the more chance you have of bridging the gap between your State Pension and your private provision in order to provide you with the lifestyle that you want in your retirement.

How much will I need in retirement?
Each person is an individual and no two people’s requirements are likely to be the same. It’s important to know the facts that apply to you. At Bow House, we sit down with you and ask those key questions. We can then give you an idea of what size of fund you are likely to need and the ways in which you can build that fund. Knowing what you need to achieve is personal power.

You may already be on course to achieve the funds you need, or you may need to consider making changes to the way you use your current income, but knowledge is power. It is no good reaching retirement and then finding you haven’t enough income, by then it is too late. It is better to have some additional income, than none at all. Call us today for an introductory chat.

Low cost pensions
Pension planning doesn’t have to cost you the earth. A personal pension allows you to contribute monthly, annual and one-off payments into your own pension ‘pot’ which is invested into funds in order to achieve as much growth as possible.

You can also invest into



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Is it time to take more control over your pension fund investments?


A Guide to Flexible Income Drawdown


There is no ‘one-size-fits-all’ approach to retirement planning


A Guide to Buying an Annuity


Scale new heights and build a bigger retirement income


Contact Us

T: 01635 248 068


Office: marilyndown@bhwm.co.uk

Andrew Benson - Managing Director of Bow House

Over the past 25 years, Andrew has held several key positions with major financial organisations including international life companies and asset management organisations.

Find out why you should talk to Andrew about your financial planning needs. Watch the video above by clicking on the play button.

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