Your pensions will probably be one of your largest financial assets so it makes sense to make sure they are in good shape. It is no good waiting until you retire before you start planning because by then you may have missed out on some important opportunities. During your working life you will probably have amassed a number of different pensions in addition to your state pension, and there are three easy ways to see if these are in good shape:
In addition to your state pension you will probably have a workplace pension or a personal pension and you may have more than one of each. For instance, if you have worked for several different companies you will probably have a different workplace pension for each company. If you are self-employed or have made your own pension arrangements you may have personal pensions.
If you don't have details about your pensions you can contact your pension provider or use a pension tracing service.
You should review your pension at regular intervals. We can check your pensions for you. There are three things to check up:
Are you saving enough? It normally makes sense to pay as much as you can into your pension plan, especially if your employer is also paying into your pension plan. It is never too late to pay money into your pension. A good time to increase your savings is when children are less of a financial burden and you have more disposable income.
Do you have the right investments? As you get nearer retirement you should be thinking about how much risk you should be taking. This can be tricky because on the one hand you want to benefit from any investment growth but on the other hand you don’t want to see your savings fall in value if there is a stock market crash. Most company money purchase plans will have a ‘glide path’ option which automatically moves your pension fund into more secure investments in the years before retirement. If you have a personal pension, you or your financial adviser will have to make your own investment decisions based on your attitude to risk.
Are you paying too much in charges? Most modern-day pension plans have relatively low charges and if you are in a workplace pension you will probably be benefiting from economies of scale. However, if you have older pension plans you might be paying excessive charges and you should get us to check this out for you.
If you have a number of different money purchase pension plans you may be better off transferring them into your own personal pension so you have all of your pensions under one roof. One of the advantages is that you may be able to arrange a better investment strategy with a larger single pot compared to several smaller pots. Also, when you reach retirement it will be easier if you only have to deal with one pot. It doesn’t always make sense to consolidate your plans, especially where there are guarantees or special terms. You should take our advice if you are not sure.