It seems that each day we hear that the state will not be able to support us in our old age and it is time that we all started to look at personal pension, but when should you start looking? Is it ever to soon to look at taking out a private pension plan?

The truth is that if you can afford to take out a private pension then you should be looking to do so as soon as possible. True, there may be “better things” you could spend you money on when you are younger, but let us not forget that each pound that you put into a pension plan today will have grown substantially by the time you retire – assuming that the UK does not go bankrupt!

There are a number of factors to consider when looking at your own private pension plan which include :-

Tax Incentives

Any contributions which you make to a pension plan will be tax free – whether taken gross at source, or the tax is reclaimed at a later date – making it very cost effective.

Regular Payments

If you set up a regular direct debit to cover your monthly premiums it will not be long before you do not even realise that the money is coming from your account.

Age

The sooner that you can start saving for your older years the better because the money that you put into a pension plan will be invested across a broad range of assets. By using this broad range approach this secures your funds from over exposure in one area and allows you to benefit from the long term growth in the UK economy.

Family

Many pension plans today will allow you to ensure that your family are still catered for in the event of your death. While the state pension has no direct provision for passing over your pension entitlement on death, it is common place for private pension plans to make provisions for the holders family.

While there are many people who would argue that there is no need to start saving for your pension when you are young because of other costs you might incur, e.g. setting up a home, etc, the longer you can contribute to your pension plan the better.

It is easy to look at the state pension now and think that at least you will have an income in later life but the truth is that the state pension has been falling in real terms for many years and is set to fall further in the future. As the UK population continues to grow and people continue to live longer, the strain on the state benefits system is getting greater and at some point it will reach breaking point.

There is also the added problem of closer ties with the EU and the likelihood that all EU partners will need to share a collective pensions burden across Europe. While the UK benefit system may be creaking, countries such as Italy have gone far beyond breaking point and have serious funding issues.

You are never too young to start thinking about your future!