Calculate Your Pension

What Is a Pension and Why It Matters?

A pension is a plan that provides a regular income to an individual after they stop working. It is typically funded through contributions from the employer, employee, or both over the course of the employee’s career. The funds are then invested, and upon , the employee receives periodic payments, either as a lump sum, annuity, or structured payouts.

There are two main types of pensions:

  • Defined Benefit Pension – The employer guarantees a specific payout upon , usually based on factors like salary history and years of service. The employer bears the investment risk.
  • Defined Contribution Pension – The employee and/or employer contribute a set amount to an individual account (e.g., a 401(k) in the U.S.), and the income depends on how the investments perform.

Pensions are common in government jobs, large corporations, and certain unionized industries, but they are becoming less common in favor of 401(k)-style plans in many private-sector jobs.

Why You Need a Pension: Stability, Growth

You need a pension because it provides financial stability and security when you retire. Here are the key reasons why it’s important:

No Salary in

After 8 years or more, but less than 12 years, the payouts when received will be for 8% for 8 years only.

Longer Life Expectancy

People are living longer, so you may need income for 20–30 years after retiring. A pension helps sustain you.

Inflation Protection

Over time, prices rise. A pension helps ensure you can afford necessities even as costs increase.

Government Benefits Aren’t Enough

State pensions (like Social Security) provide basic income, but often not enough for a comfortable life.

Peace of Mind

Knowing you have a pension means less financial stress and more freedom to enjoy .

Remember: the average weekly pay-in still counts after 35 years until the payout stage.

What type of pension should I start? Types of Pension Plans: Defined Benefit vs. Defined Contribution

The best type of pension for you depends on your work situation, financial goals, and how much control you want over your savings. Here are the main types to consider:

If you have a job, your employer likely offers a workplace pension, and in many countries, they are legally required to contribute. Defined Contribution (DC) Pension – Your money is invested, and the final amount depends on how well the investments perform. Defined Benefit (DB) Pension – A guaranteed pension based on salary and years worked (rare but great if available). Best for: Employees who want employer contributions.

If you don’t have a workplace pension (e.g., if you’re self-employed) or want to save more, you can start a personal pension. Options include: Self-Invested Personal Pension (SIPP) – Gives you control over investments (stocks, funds, etc.). Stakeholder Pension – Lower-cost, more regulated option with flexible contributions. Best for: Self-employed individuals or those wanting additional savings.

In many countries, you can qualify for a state pension by paying into national insurance or social security. It’s usually not enough for a comfortable but can supplement your personal or workplace pension. Best for: Everyone, but should be combined with other pension plans

Which One Should You Start?

  • If employed → Enroll in your workplace pension (free employer contributions!).
  • If self-employed → Consider a SIPP or personal pension.
  • If you want more security → Contribute to both workplace and personal pensions for a stronger plan.

Would you like help figuring out how much to save or where to start?

When should I start my pension?

The best time to start a pension is as early as possible—ideally in your 20s or 30s—but it’s never too late to begin. The earlier you start, the more time your money has to grow due to compound interest.

Why Start Early?

More Growth Over Time – Even small contributions in your 20s or 30s can grow significantly by .
Less Pressure Later – If you start early, you don’t need to contribute as much each month compared to starting in your 40s or 50s.
Employer Contributions – If your employer offers a pension, you’re missing out on free money by delaying enrollment.

What If You Start Late?

  • If you’re in your 40s or 50s, you’ll need to contribute more aggressively, but you can still build a good pension pot.
  • Taking advantage of employer contributions, tax relief, and investment growth can still make a big difference.

Bottom Line:

  • Start ASAP to maximize growth.
  • Even small contributions now are better than bigger contributions later.
  • If you haven’t started yet, it’s not too late! The key is to begin as soon as possible.
  • Would you like help calculating how much you need to save based on your age and goals?

Step-by-Step: How to Start with Addison Pherlus Pension Fund

Pension planning involves setting goals for your and figuring out how much you need to save to achieve them. Let’s break it down step by step:

Step 1:

Set Your Goal

  • When do you want to retire? (e.g., 60, 65, or later)
  • How much income will you need in ? (e.g., 50-70% of your current salary is a common target)
  • Consider lifestyle choices – Will you travel, downsize your home, or have high medical costs?
Step 2:

Check Your Current Pension Situation

  • Do you have a workplace pension? – If yes, check how much you and your employer contribute.
  • Do you qualify for a state pension? – Check how much you’ll get and when.
  • Do you have any personal pensions or investments?
Step 3:

Estimate How Much You Need to Save

Based on your age and desired income, you can calculate how much to save monthly.

A general rule: Save 10-15% of your income starting in your 20s. If starting later, you may need to save more.

Use a pension calculator to get a precise figure (I can guide you on this if needed!).

Step 4:

Choose the Right Pension Plan

If employed → Join your workplace pension (free employer contributions!).

If self-employed → Open a personal pension like a SIPP.

Consider extra savings → If you can, contribute more to boost your fund.

Step 5:

Review & Adjust Regularly

Check your pension balance yearly.

Increase contributions if your salary goes up.

Adjust investments based on your risk level and age.