MoneySense for Schools: Pensions

My MoneySense

Life choices and savings

Pensions

It's never too early to start saving for a pension.

Look at the video of our expert answering questions from young people about pensions, and find out more in the fact file.

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Chris May is an expert when it comes to pensions. He's come to this school to talk to pupils here about pensions. What are they? Why do you need them? And when do you start?
Pupil 1: So what is a pension?

Chris May: Well a pension is a financial product that you pay into while you're working and the aim is to build a big big pot of money so when you retire there's enough in that pot to enable you to do all the things you want to do in your retirement and to cover your normal day to day living expenses.

Pupil 2: At what age should I start saving?

Chris May: Well, the sooner the better. The sooner you start it gives you more opportunity to build up your big pot of money and as an example, if you started a pension and you're aged twenty and put in £10 in every £100 that you earn, you'd get a pretty decent pension when you get to 65. But on the same basis, if you don't put any money into a pension until you're 40, that amount goes up to £27 in every £100 that you earn, so the sooner the better.

Pupil 3: Aren't there a lot of problems with pensions?

Chris May: Well pensions are designed to run over a long period in time and pensions are an investment and investments go up and they go down and you'll have heard perhaps of stock market crashes, property crashes and property price increases, having a pension over a long period tends to take those peaks and troughs out and hopefully will give you a decent return over that longer period.

Pupil 4: Why do I need a pension?

Chris May: Well look at the moment we get a state pension through the government, we don't know when we retire what age we're going to get that at and the thing is it's good to be in control of your own situation so you know in advance how much money you're going to need and how you can plan then to make sure you've got enough to do all the things that you want to do in retirement and still to cover your living expenses.

You might have a particular plan for later in life, such as maybe living abroad or taking a dream trip, or you might just want to make sure you can do the things you want to do. It might seem like a long way off now, but you can't start saving for a pension too early.

Video transcript

Pensions PDF

RBS The Royal Bank of Scotland

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