James Medd
November 2016.

Is it really worth having a pension any more?

1 answer

For most people the answer is yes, because unless you die young or unless you intend to work until you drop dead, you’re going to need a pension

Remember that in the UK, saving is relatively attractive. Returns may not be very high at the moment due to very low interest rates but you can put quite a lot of money each year into an ISA [Individual Savings Accounts, which allow you to save up to £15,240 per year in each of three different types] and all the returns on that in the future will be tax-free, and pensions are quite generously treated in tax terms still. 

You shouldn’t count on your money growing very rapidly necessarily, but it’s still worth saving, and people should be saving. There’s not really a viable alternative, and for most people if their employer provides a pension it’s usually a good deal. Why have pensions earned such a bad reputation lately? I think it’s partly because interest rates have gone down and partly because the pension schemes used to be very, very generous indeed. Now they’re less generous. 

It’s true that they’re not as good a deal as they were 20 or 30 years ago, but pensions are still encouraged by the tax system and are still something people should be doing.