What is the first step to a pension?

By THIS IS MONEY
Updated: 06:02 EST, 13 August 2008

I am in my mid twenties and the thought of sorting a pension terrifies me.

Dont delay it: Get started on your pension today

What is the first step to getting one sorted out? Also, what are the benefits of putting money into a pension rather than saving up for my first house? SM

Ian Naismith, of Scottish Widows, replies: You're certainly not alone in being terrified of pensions. But they're really not too bad if you just think about them as a way of saving for your retirement.

The main differences from other savings are that the Government pays into your pension through tax relief and that you can't get your money back until you're at least age 55.

At your age, the best type of pension is what's called a 'stakeholder pension'. These are relatively simple and have low charges. You can get them online or you can go to your bank or an independent financial adviser. You can start by paying in as little as £20 a month if you want to, but it would be better to pay more if you can.

The advantages of starting a pension now is that money saved when you're young has longer to grow than money saved later, and the sooner you start the better. You also gain more quickly from the tax breaks the Government gives to pensions.

However, it's perfectly understandable if your priority is to get on the housing ladder, and that shouldn't be a problem as long as you don't leave you pension for too long. Ideally, of course, you should do both if you can afford it.