Tips to keep your pension on track
A survey has found that four out of five people do not feel confident that they’re putting enough aside for later life. This equates to some 30.4 million working-age people across the UK, according to the report from the Pensions and Lifetime Savings Association (www.plsa.co.uk).
If you think you might be one of them, here are some tips from Nigel Peaple, director of policy and research at the PLSA, to help with retirement planning.
◆ Enrol in your workplace pension, if you haven’t done so already. Over a third (36 per cent) of people surveyed said their employer matched their pension contribution, and a quarter (26 per cent) had an employer who paid in more than they did. With tax breaks and investment growth, the money will go further than you think.
◆ Make use of the support available when you approach retirement. Pension Wise is a free government guidance service offered to people aged over 50 to help them understand the different options available at retirement (https://www.pensionwise.gov.uk/en).
◆ Don’t assume that the amount you are saving into a workplace pension is enough. The minimum workplace pension contribution level is currently 5 per cent, increasing to 8 per cent next year, and half (51 per cent) of people surveyed wrongly think this minimum is the “recommended amount”.
◆ Consider whether you could be saving more for your retirement. A third (34 per cent) of people said they could afford to save more towards their pension – increasing to 42 per cent of millennials.
◆ Don’t ignore your annual statement from your pension provider. It’s important to read your statements and consider whether you need to take any action as a result, for example, updating your expected retirement age or consolidating different pension pots into one with lower charges.
◆ Consider regulated financial advice. An independent financial adviser could help you get the right product or products to suit your needs and help your money go further.
◆ Don’t be afraid to ask questions. If you need to know more about such issues as charges or your investments, your scheme provider will be able to help. The Pensions Advisory Service can also offer free, independent information and guidance on pension matters.
◆ Spend time thinking about how you want to access your money in the lead-up to retirement. Only a third (31 per cent) are confident they understand all the options available. Deciding what to do with pension savings is a very complex decision and sometimes you only have one chance to get it right, so it’s important to dedicate some time to retirement planning.
◆ Don’t fall into a scammer’s trap. Be wary if a company approaches you out of the blue – whether over the phone, by email, or in person – and make claims of high returns with low risk, or tax loopholes. If it sounds too good to be true, it usually is.
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One in ten taking pension in one lump sum face tax penalty
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