Starting a Pension at Eighteen · seed 1 · A4, ink-friendly. The answer key prints on its own page for grown-ups.
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Plan pension saving at eighteen

Life Skills · Money & Finance · ages 16-18
Name ______________________   Date ____________

  1. A pension illustration assumes 5% growth every year. Does this prove that your invested pension will grow by 5% each year?

    • Yes, the model fixes the yearly rate
    • No, actual investment returns can vary
    • Yes, starting young fixes the future rate

  2. What does compounding mean?

    • Past growth can earn further growth
    • Only deposits can earn later growth
    • The same cash gain is added each year

  3. Your scheme offers a 50% employer match on your eligible £40 contribution. If you do not contribute, you leave £20 of available employer money unclaimed.

    Circle one:   True   False

  4. A proposed pension payment would leave essential bills or required debt payments unpaid. What should you do before choosing the contribution?

    • Borrow for bills and pay the full sum into the pension
    • Review the budget and match rules; seek money advice
    • Skip bills because future pension growth is certain

  5. The lesson's forty-year fee model gives £10,000 without fees or about £6,690 with the 1% yearly fee. How much lower is the fee-paying result?

    • About £100 lower overall
    • About £6,690 lower overall
    • About £3,310 lower overall

  6. Two suitable pension funds have the same holdings and risk level. One has lower total fees. What does that lower fee mean?

    • More money stays invested, with risk remaining
    • Future yearly returns are fixed and guaranteed
    • Diversification no longer matters for the fund

  7. Your take-home pay rises. What should guide a decision to increase your pension contribution?

    • Review the budget, then increase it if affordable
    • Put the whole rise into the pension without a review
    • Stop saving for emergencies after the pay rise

  8. One £200 contribution at twenty grows to about £1,408 at sixty; at forty, about £531. Both models use 5% annual growth, no fees or taxes. Which comparison is supported?

    • The earlier model has £877 more because twice as much was paid in
    • The earlier model proves that all real pensions will grow every year
    • The earlier model has about £877 more after twenty extra growing years
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Answer key

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Plan pension saving at eighteen W1-mt_mGfpMq2IAW-s1

  1. No, actual investment returns can vary · An assumed return helps compare plans. It does not promise future investment returns.
  2. Past growth can earn further growth · Later growth is calculated on a balance that includes earlier growth.
  3. True · Under these rules, 50% of £40 is £20, added only when you make the eligible contribution.
  4. Review the budget and match rules; seek money advice · Check affordability and employer rules. Uncertain future returns cannot settle a current payment shortfall.
  5. About £3,310 lower overall · £10,000 minus £6,690 is £3,310. This final-value gap includes fees and lost growth.
  6. More money stays invested, with risk remaining · With other features equal, lower fees leave more invested. They do not remove investment risk.
  7. Review the budget, then increase it if affordable · Higher pay may support a larger contribution, but bills, debt and accessible savings still need checking.
  8. The earlier model has about £877 more after twenty extra growing years · Both start with £200. The model difference is £1,408 minus £531, about £877, after forty versus twenty years.
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