Planning for Retirement Retirement is one of the most important financial decisions anyone can make. Everyone needs money to live on when they retire, but few people think enough about long-term savings. Can I afford not to save for retirement? The question should not be 'Can I afford to save for retirement?' but 'Can I afford not to save for retirement?'

Planning your retirement is not just simply a matter of putting money into a pension plan when you feel you can afford to. For a comfortable retirement you will need to have a structured, long-term plan with a number of elements, from traditional pension savings to specialised investments. However, your plans must be flexible enough to adapt for any eventuality. The Trustees of the Kingfisher Pension Scheme strongly recommend you seek professional help when planning your retirement by speaking to an Independent Financial Adviser. The Trustees are unable to provide this advice.

It is easy to contribute to the Money Purchase Section of the Kingfisher Pension Scheme if you are not already a member. Contributions are deducted from your pay before tax, and therefore you receive tax relief at your highest rate.

The longest holiday of your life

Retirement is often described as the 'Longest Holiday Of Your Life' - and you would never consider going on holiday without any spending money, would you? But that is exactly what thousands of people do.

You work hard all your working life only to find that, when you cease employment, you have much less money to live on than you would like to - sometimes, a lot less than you actually need. There are a number of good reasons why this is the case. For example, many people grew up thinking that the Government will provide them with a decent pension. Or maybe they thought retirement was a long way off into the future, or they would win the lottery before then. For most of us, this simply is not the case.

How much money will I need in my retirement?

You will probably want to plan on retiring with an income that is a relatively high proportion of the earnings you were used to before retirement.

Some costs of living, such as mortgage payments and taxes, are usually less in retirement. However, you will also have more free time and your pension in payment will probably not increase as quickly, each year, as your earnings may have done.

Therefore, aiming for a relatively high proportion of your final earnings as a pension is usually a sensible course of action to take.

The chances are that, unless you are well off financially, you will need a pension because:

• You will need money for your increased free time
• People are living longer - your retirement could make up a third of your life
• People are taking out larger mortgages, later in life. Your mortgage may not be paid off.

Your Personal Benefit Statement will give you an idea of the amount of income you are likely to retire on.

Relying on the State Pension alone is unlikely to guarantee a standard of living you would like when you retire

Could you live on £12.43 a day? This is the current full basic State Pension for a single person (£87.30 per week). Whilst you may be able to top up this with means tested benefits, so you may get £119.05 a week, this still isn't much to pay for everything. Furthermore, there is no guarantee that means tested benefits will be available from the State when you retire. The maximum savings credit part of the Pension Credit will be frozen from 2015, which will reduce the number of pensioners eligible for means tested benefits.

That's why you may want to think about supplementing any Government Pensions you get with saving and investing - either in pension plans, savings schemes or share-based investments, or a mixture of all.

Assess your retirement income

The starting point for any retirement planning is to assess how much income you might expect to receive after you finish work. Your retirement income might come from a number of sources:

From the Government

The basic State Pension

The current basic State Pension is £87.30 per week for a single person and £139.60 per week for a couple. It's currently payable from age 65 for men and age 60 for women (rising to age 65 between 2010 and 2020). To receive the full basic State Pension you must have paid, or be treated as having paid, National Insurance Contributions for sufficient qualifying years.

State Second Pension (S2P)

This was previously known as the State Earnings Related Pension Scheme (SERPS). Employees with earnings over a lower limit build up entitlement provided they aren't contracted out of SERPS or S2P through a private pension plan. Earnings over an upper limit don't count for SERPS or S2P. The rules governing S2P are complicated, so it's difficult to work out what you're entitled to. But help is at hand - you can obtain a State Pension forecast direct from the DWP. If you would like a forecast please contact Future Pension Centre, The Pension Service, Tyneview Park, Whitley Road, Newcastle upon Tyne, NE98 1BA. You can telephone 0845 300 0168 or visit www.thepensionservice.gov.uk.

If you're a member of the Final Salary Section of the Kingfisher Pension Scheme you will not build up S2P whilst a contributing member, as part of the benefits you receive from the Scheme will include your S2P benefit, but you will build up S2P if you are a member of the Money Purchase Section.

Pension Credit

This was introduced in October 2003, and although it isn't really a pension, it guarantees everyone aged 60 and over an income of at least £119.05 per week for a single person and £181.70 per week for a couple. If your total weekly income falls below the single or couple limits, the Pension Credit will make up the difference. Between 2010 and 2020 the starting age will gradually rise to age 65. You should remember that the Pension Credit could be subject to change by a future Government. And could be removed altogether.

Kingfisher Pension Scheme

The Scheme offers two types of pension:

If you joined the Scheme before 1 April 2004, you are probably building up what's known as a final salary pension. This is calculated as a proportion of your salary at or close to your retirement, e.g. 1/60th or 1/80th of final salary for each year of service whilst a member of the Scheme. So if you complete 30 years' service, your pension will be half (i.e. 30/60ths) of your salary when you retire.

If you joined the Scheme after 1 April 2004, you will build up what is known as a money purchase pension. Both you and your employer pay contributions at a fixed rate that are invested for you until you retire, when the value of your retirement account will be used to buy your pension. The amount of pension is not fixed and depends on the value of your retirement account and the cost of buying a pension when you retire.

Other pensions

You may also have built up a pension in a personal or stakeholder pension plan or in an occupational (company) pension scheme run by a previous employer. If this was a money purchase arrangement you should receive an annual statement telling you about the value of your retirement fund and a forecast of the pension it might provide at retirement. If it was a final salary arrangement, you may not receive a statement yearly, but you are entitled to request a statement from the administrator of the scheme once a year.

Building up a retirement income

If you have not already done so, you can begin to build up a pension by becoming a member of the Money Purchase Section of the Kingfisher Pension Scheme. The Scheme offers a tax efficient way to build up a pension - and the Company helps too by matching your core contributions to the Scheme. Simply by making payments while you're working, you will be building up income to help protect your lifestyle after retirement and for the rest of your life.

Brief details of the pension benefits offered by the Kingfisher Pension Scheme are provided in our article, Kingfisher Pensions at a Glance. Alternatively, you can find out more from the Member Guide and the booklet called Choosing Your Investments or by visiting the Pensions Website www.kingfisherpensions.com, or ask your local HR contact for assistance.

So what's next?

I've decided, I need to save more, so when should I start?

Striking a sensible balance between a 'live today, pay tomorrow' and a 'save today, live tomorrow' approach will help you aim for what you want out of life, both now and in the future.

A lot depends on your personal circumstances but long-term savings are usually more effective if they are started sooner rather than later. Why? Because:

• people are living longer
• the earlier you start the more time you'll have to save.

Increasing your Kingfisher Pension

You can increase the benefits you receive at retirement by paying Additional Voluntary Contributions (usually known as AVCs) and, if you are a member of the Money Purchase Section, by paying Additional Core Contributions. As with ordinary contributions, paying additional contributions is a tax-efficient way of providing extra benefits. If you are a standard rate taxpayer, for every £100 you pay, the overall cost to you is just £78, and the saving is even more if you pay higher rate tax. You can now pay up to 100% of your earnings as a pension contribution subject to the Annual Allowance.

If you are already paying additional contributions or if you are considering your options, it is important to choose the right long-term investment fund for your particular circumstances. This will depend, for example, on your age, how many years until you retire, how much you can afford to pay and your attitude to the amount of risk you are prepared to take.

Money Purchase Section (KPS-MP), AVCs

If you are a member of the Money Purchase Section, then like your normal Core Contributions AVCs are credited to a retirement account. However, they will not be matched by the Company.

Money Purchase Section (KPS-MP) Additional Core Contributions

If you are a member of KPS-MP, then instead of paying AVCs, you can increase your Kingfisher Pension by paying Additional Core Contributions. Normally, Additional Core Contributions will not be matched by Company contributions, but once you have been in continuous membership of a Kingfisher Pension Scheme for 5 years (earlier in some circumstances) matching amounts will be credited to your retirement account of up to 2% of your basic salary, depending on how much extra you are paying.

Both AVCs and Additional Core Contributions are invested in the same way. Information about investment options is provided in the booklet called Choosing Your Investments you were (or will be) given before joining the Pension Scheme. Additional copies can be printed from the Pensions Website at www.kingfisherpensions.com.

Final Salary Section (KPS-FS) AVCs

If you are a member of KPS-FS, the Scheme offers a number of investment choices for your AVCs.

With-Profits Fund, currently invested with Prudential, which aims to provide steady growth with a guarantee that if the monies are left in the Fund until retirement, they will only increase in value.

Unit-linked funds, where the value of the funds are directly linked to Stocks and Bond markets. Unit-linked funds are currently invested with two AVC providers, BlackRock and Legal and General, who offer a range of investment funds.

You can find further details about AVCs on the Pensions Website www.kingfisherpensions.com. Please note, AVCs can now be taken in cash form giving even greater flexibility.

Other ways to increase your pension

You can increase your pension independently of the Kingfisher Pension Scheme by contributing to another registered pension arrangement such as a Personal Pension. If you are a member of the Money Purchase Section, you could also use what is known as an Appropriate Personal Pension Plan to contract out of the State Second Pension. However, the Company will not contribute to any other pension arrangement apart from the Kingfisher Pension Scheme, and you should seek independent financial advice before joining a pension arrangement.