Are Pensions Still Relevant?

Friday 14 April 2023

Written by Suda Ratnam

Are Pensions Still Relevant?

Are Pensions Still Relevant?

Old-age social pensions provide an alternative source of income for elderly adults who are not covered by contributory schemes. Pensions have been a staple of retirement planning for decades, but as the world changes, the question arises, are pensions still relevant in the modern world?

The short answer is yes. There are several myths that are all false. These include “it’s not worth saving for pension” and “I’ll lose all my money if my employer goes out of business”. Most people can expect to get back more in retirement than they put in their pension. The current workplace pensions are protected in various ways to make sure you don’t lose out, despite what you may have heard on the news.

Pensions may not be the only option for retirement planning, but they still play an important role in helping individuals secure their financial future 

One of the main advantages of pensions is their predictability. They provide a steady stream of income that can help individuals plan for their retirement and manage expenses. Additionally, pensions often come with added benefits such as health care coverage, which can be especially valuable in retirement.

Another advantage of pensions, with the introduction of workplace pensions (Auto-enrolment), is that they are often provided by employers, which means that employees don't have to worry about saving enough money on their own. With the current workplace pensions, the employer must pay 3% and the employee must pay 5% making a total contribution of 8% of the salary.  Also, an employer-sponsored pension can help ensure that employees have enough money to retire, even if they haven't saved as much as they would have liked.

In addition, the government gives tax relief for pension contributions. Tax relief means some of your money that would have gone to the government as income tax, goes into your workplace pension instead.

There is some concern that some employer funded pensions are becoming increasingly underfunded, which can put the security of future benefits at risk. Additionally, pensions are generally based on the assumption that people will retire at a certain age, which may not be realistic for many individuals.

Despite these challenges, pensions can still be an effective way for individuals to plan for their retirement. However, it is important for individuals to understand the benefits and limitations of pensions, and to consider them alongside other options such personal savings.

To make the most of your retirement planning, it is important to take a holistic approach that considers your individual needs and goals, as well as the current state of the economy and the pension plans available to you.

If you have any questions or are keen to know more about your pension, email me at or click here.

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