There is no magic number as to how much you will need to accumulate for your retirement, but careful planning will go a long way towards helping you save what you will need.
A common trend we are seeing more frequently are members adding “Additional Voluntary Contributions” into their company pension plan.
So firstly, what are “Additional Voluntary Contributions”?
Additional Voluntary Contributions are extra funds you can choose to add to your mandatory pension contributions, and are also set aside as retirement savings. These funds are deducted from your pay by your employer and remitted directly to your pension provider along with your regular pension contributions.
Why contribute additional funds as opposed to just opening a personal savings account?
I think the most obvious answer would be that since it is a payroll deduction, it falls into the ‘out of sight, out of mind’ mentality. You automatically save it before you can spend it and over the course of time the additional growth of your pension might even encourage you to increase those additional voluntary contributions.
Another key feature of using your pension as an additional long term retirement savings vehicle is that you can designate a beneficiary, meaning should something happen to you prior to retirement, your funds would go directly to the person you name. With a personal savings or investment account the proceeds would form part of your estate and be dispersed based upon the terms on your Will [this can take time].
Planning is key
It does not matter whether you are approaching retirement or if you will be working for another twenty or thirty years, planning is key. There are a number of steps you can take to get the most out of your retirement savings and put yourself in a position to live the retirement you’re dreaming of, not what your budget dictates.
The reality is, retirement IS very different from what retirement WAS and the only person who can ensure you have sufficient funds for your retirement is you. Government and the mandatory portion of Company Pension plan is designed to complement your retirement savings not be the sole funders for your retirement.
Article published in Bernews, January 26, 2016