The Emoji Guide To Pensions

Because this is how we speak now.

First things first: Most people are entitled to a state pension of £155.65 a week* (but you might not get all of it).

Antonia Bonello / BuzzFeed

This is partly what your National Insurance contribution goes towards, and it works out to a total of £8,093.80 per year.

You need a minimum of 10 complete years of National Insurance contributions to qualify for a state pension and 35 complete years to get the full amount.

*As of the 2016–17 tax year. If you were contracted out, you may get a lesser amount.

However, you likely won't be able to access this until you're 68.

Antonia Bonello / BuzzFeed

Assuming you're under 38 years of age, 68 is your projected retirement age based on today's rules. However, it's impossible to predict whether this will stay the same by the time you're actually ready to retire. It could move higher or lower.

You can check your projected state pension age here.

£155.65 is pretty slim pickings, which is why you might want to consider an additional pension.

Antonia Bonello / BuzzFeed

There are lots of ways to put money away for your future. Savings and investments offer various levels of risk and reward, but one of the most common and practical ways is through a workplace pension.

The good news is that the law now says your employer has to automatically enrol you in a workplace pension.

Antonia Bonello / BuzzFeed

All UK employers will have to provide a workplace pension by 2018. This is called "automatic enrolment".

To qualify, you need to be at least 22 years old and earning over £10,000 per year as a contracted employee in the 2016–17 tax year.

This news is good because...

If you pay into a workplace pension, your employer has to pay into it for you as well.

Antonia Bonello / BuzzFeed

This is extra money on top of what you already earn. At a minimum, you will contribute 1% per month of your qualifying earnings, and your employer will contribute an extra 1% on top.

Qualifying earnings refers to the portion of your salary that is eligible for your pension. The first £5,824 does not count towards your qualifying earnings, and the maximum limit currently is £43,000.

These lower and upper limits are reviewed every year by the government.

You and your employer's contribution will increase over the next couple of years too.

Antonia Bonello / BuzzFeed

Your employer's contribution will rise to 3% of your qualifying earnings by 2018. Again, this is additional money on top of what you already earn.

Meanwhile, your personal contribution will rise to 5% of your qualifying earnings by this time. You can get an idea of the minimum your employer will pay in each year with this handy calculator.

If you choose to pay in more than the minimum, some employers may offer to match this too.

Antonia Bonello / BuzzFeed

Some employers may offer a structure where, if you contribute more, they may increase their contributions too. So it's worth finding out more about your workplace pension scheme.

However, regardless of whether your employer matches, you may want to pay more than the minimum because...

When you pay into a pension, the government will give you back some of the money you paid in tax.

Antonia Bonello / BuzzFeed

It's called Pension Tax Relief and this is how it works:

Basic-rate taxpayers pay £2 income tax on every £10 they earn above their personal allowance. (This is set at £11,000 for the 2016/17 tax year.) Pension Tax Relief means that for every £8 you contribute to your pension, the government will give you back £2. This is usually claimed automatically by your pension provider.

While most pension schemes give you the tax relief automatically, in some cases, you may have to fill out a self-assessment form. This tax relief is applicable for up to 100% of your salary or up to the annual allowance of £40,000 – whichever is lower.

And if you earn over £43,000, you can claim even more tax relief.

Antonia Bonello / BuzzFeed

If you're a higher rate taxpayer (currently above £43,000 per annum) and your contributions were paid into a personal pension scheme, you may be able to receive 40% tax relief. (Workplace pensions can be provided through personal pension schemes.)

The first 20% will usually be claimed back automatically by your pension provider and held within your pension. The additional 20% you will need to claim back through your self-assessment and is paid to you directly.

Broadly speaking, there are two different types of pension.

Antonia Bonello / BuzzFeed

Don't worry, this bit's not too difficult!

Most workplace pensions are "defined contribution" schemes.

Antonia Bonello / BuzzFeed

This is where your money is placed in various investments, which you hope will grow over time.

You can choose these investments yourself, if you like. However, the options you'll be given will depend on what the provider offers.

Generally, you will be invested in the default investment unless you decide otherwise. If you are auto-enrolled and this happens, there is a small charge for the pension being managed on your behalf, capped at 0.75%. If you choose your own investments you will need to check what fees apply.

But it's important to note that the value of an investment is not guaranteed and can go down as well as up. You may get less than what has been invested.

Antonia Bonello / BuzzFeed

Alternatively, there is the "defined benefit" pension.

Antonia Bonello / BuzzFeed

These usually come in the form of Career Average Revalued Earnings (CARE) schemes. This is a guaranteed pension payout, calculated using your average pay across your whole career.

There are also final salary schemes, which give you a payout based on the size of your salary and how long you've worked for a company. However, these are more rare today.

If your employer gets into financial trouble, there are measures in place to help protect your pension.

Antonia Bonello / BuzzFeed

If you have a defined contribution scheme, the money is generally held by the pension provider, so it would be unaffected.

With defined benefit schemes, you're covered by the Pension Protection Fund, which usually pays a minimum of 90% of your fund back.

You can usually access a personal or workplace pension as early as 55.

Antonia Bonello / BuzzFeed

That could be as many as 13 years earlier than your state pension.

Depending on what you've been up to, maybe you can retire earlier than you first thought! However, it is worth pointing out that if you do choose to retire early, your income is likely to be less than if you waited until state pension age.

If you're unsure, you can always speak to a financial adviser. The decision's up to you, but there's lots of help at hand too!

Antonia Bonello / BuzzFeed

How much do you think you should be saving for your retirement?

Use Aviva’s Shape My Future interactive online tool to build your future life and discover how much you might have to live on in retirement.