Planning ahead makes sound sense

Pension planning - the earlier the better…

Saving for old age may seem desperately uncool for the young. But because of the way that pensions work, the earlier you start - and however modest your original savings are, the greater the likely pension you will collect upon retirement. The problem is that when you are about 20 years old, retirement (and old age) seem a long way off. There are more immediate demands on your wallet or purse - and retirement seems a long way off.

But the world is changing. Twenty years ago or more people were predicting that the advent of computers would mean that there would be little need to work and that we would all enjoy enormous amounts of leisure time. The truth has proved to be different. Statutory retirement age has risen for the fist time since state pensions were introduced in 1908 when the retirement age was 70.

The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.

Recent reports show that today's young people can have an expectation of life far beyond that of previous generations. This means that they will work longer - and probably spend more time in retirement - to the point that they might spend almost as many years in retirement as they have done in work. At the same time as the population ages, we will have a situation where those in work are having to contribute more and more to pay the pensions of the retired. In this situation, the State will find it harder to provide adequate levels of support through the state pension.

For the generation that is now coming into the workplace, the importance of investment in a personal pension has never been greater.

Pensions planning ahead