What alternatives to pensions are there?

Well, you could put money under your mattress, though this is not advised, if only because you would end up with a very lumpy bed if you saved enough this way.

But the commonest alternative to having a pension is not having any significant retirement savings at all. This means you will rely on the state pension and means-tested benefits when you retire. How far above the poverty line – if at all – this takes you will depend on the generosity of the government of the day.

Other people are relying on other ways of saving and investment such as property. This may make sense for some, but just because property investments have done better than stock markets in the recent past, it does not mean this will continue. Pensions attract favourable tax treatment while property, other than your main home, is subject to capital gains tax. Few experts recommend this route to retirement security for most people.

Of course it makes sense to have some savings that you can get at easily. Financial advisers will always say that you should use excess funds to pay off debt and build up some emergency savings as a priority – say two to three months pay.

One advantage of saving for a pension is that if you are a tax payer then you will get a tax rebate. Another way of saving that attracts tax benefits is to take out an ISA. ISA stands for Individual Savings Account. You can find out more about ISAs and other forms of saving from the Money Advice Service, which is an independent service set up by the government. However, with a workplace pension, you are likely to get an employer contribution too, adding extra money to your retirement savings.

Note: This content is provided as general background information and should not be taken as legal advice or financial advice for your particular situation. Make sure to get individual advice on your case from your union, a source on our free help page or an independent financial advisor before taking any action.