Pension top FAQs answered
Here are some FAQs to get you started as you build a retirement pot worth waiting for.
How much money should I have in my pension?
The Retirement Living Standards set by the Pension and Lifetime Savings Association (PLSA) say that a single person would need £31,300 a year for a moderate standard of living, and a couple would need £43,100 a year for the same living standard.1
Research by Fidelity found that saving seven times your annual income by age 68, together with the state pension, should maintain a similar standard of living in retirement as in working life.2 Check out our pension calculator in-app to get retirement ready and see if you’re on track to reach your ideal retirement pot.
Here’s a pension 101 explainer from our Head of Personal Finance.
What are the different types of pension?
You could end up with different types of pension depending on whether you’re employed or self-employed, and the pensions available from a particular employer.
- The State Pension: This is from the government and the amount you get is based on your National Insurance contributions.
- Workplace pensions: Employers must now automatically enrol their staff into a workplace pension if they are older than 22, earn more than £10k, and usually work in the UK.
- Personal pensions: There are two types of personal pension: stakeholder pensions and self-invested personal pensions (SIPP). When you consolidate your old pensions with Moneybox, you’ll have a SIPP.
What is pension tax relief?
You contribute a set amount to your pension and, to encourage you to save, the government tops up your retirement pot with the same amount you would have paid in tax on your earnings.
How much free money the government gives you depends on how much you earn, how much tax you pay, and how much you have contributed to your pension in the past three years.
There is a cap on it, though. If you’re paying income tax in this tax year – you can usually get pension tax relief on contributions up to £60,000 (your allowance).
Tax treatment depends on individual circumstances and is subject to change.
Can I transfer Pensions?
Yes you can! It’s really easy – we just need a few details and you can do it all in-app. Or, you can get help with our Pension Provider Search tool and our team of Pension Detectives will do the leg work for you.
Check T&Cs for transfer eligibility. Consider the product charges and benefits, and whether the profile of the investments offered matches your needs.
Where does my money go?
When you invest with a Moneybox Pension, you’ll have a few options of where you put your money. The main thing to keep in mind is that it will be invested in funds.
Funds let you invest in a group of different financial assets like stocks and bonds without having to buy them directly. Here’s a breakdown of the different funds we offer for your pension.
- Lifepath Retirement Starter Fund: If you don’t feel confident managing your own investments, you might want to choose the Starter Fund. This fund adjusts your pension as you go through life. It automatically moves your money from higher growth assets when you’re younger, to safer investments as you get closer to your retirement year.
- Fidelity Index World: Track the global stock market with a fund that follows the performance of more than 1,600 companies.
- HSBC Islamic Global Equity Index: Follow the principles of Islamic finance by excluding industries like alcohol and tobacco from your investments.
- Old Mutual MSCI World ESG Index: Invest in global companies that score highly on environmental, social, and governance (ESG) factors.
- BlackRock LifePath: A ‘Lifestyle’ fund that changes the balance of investments as you get closer to your retirement date. When you select this fund you’ll be asked to select the one with a target date that matches when you think you will retire. If you’re unsure of this, we recommend that you speak with an independent advisor.
You can also customise your pension allocations if you’d like to take greater control over your money. This lets you tailor your pension investments across the Fidelity Index World, HSBC Islamic Global Equity Index, and Old Mutual MSCI World ESG Index funds.
If you want more retirement content, check out our Pension Academy. It’s a step-by-step guide to help build your confidence and set you up for success as you build a retirement pot worth waiting for.
As with all investing, the value of your pension can go up and down, and you may get back less than you invest
1 PLSA Retirement Living Standards
2 Fidelity International’s Retirement Savings Guidelines white paper. September 2020