Your pension is probably one of the most important investments you could ever make. Over the years, how much you pay into your fund – and how much it grows by – will go a long way to determining your quality of life in retirement. Given the importance this pot of savings could have on your future, and how complex it can be to assess, you might be asking “how can I review my pension?”
First things first, find out how much your pension is worth
Each year, your pension provider should send you a statement detailing how much you are paying into your pension, its current value, and its projected value at the plan's selected retirement date. It will also consider the long-term impact inflation may have on the future spending power of your savings.
Next, consider if this is going to be good enough for what you need
If the projected value of your pension is short of what you think you will require in retirement, you need to address this. The obvious first step is to check if you are paying enough into your pension, if you can afford to pay in more, and whether you can increase your contributions whilst remaining within the allowance limits. If you have a workplace pension, your employer will also usually match your contributions.
Then there is the investment element. What you pay into a pension isn’t stored away until you can access it, but invested with the aim of generating positive returns.
Many people opt to stay in their provider’s default fund, but this might not be right for your circumstances. Other funds are often available, but they can cost more.
Make sure you are taking an appropriate level of risk
How your fund is invested should tie in with your appetite for risk and reward.
- If you are many years away from retiring, you might be prepared to accept a greater level of risk now in view of the length of time until you retire.
- If you are close to retiring, you might want to start reducing your level of risk.
Look at the charges you are paying (especially for old pensions)
You might be paying more in fund management charges than you strictly need to, which could impact on the value of your pension.
Older pension policies can sometimes carry higher charges, but may also offer valuable guarantees. Which is why it is a good idea to get financial advice, before you consider switching to a cheaper plan.
Get expert help on where you are (and where you want to be)
If your circumstances qualify for our pension review service, you can benefit from expert analysis on your financial arrangements, to see how they measure up to achieving your goals.
A review will include:
- Initial discussion with your adviser about your retirement objectives and plans.
- Detailed analysis of all your current pension plans, including state pension (please note: this typically takes 3-4 months to complete but could take longer).
- Personalised recommendations where we identify a shortfall, or where we feel you need to take action to have a better chance of achieving your objectives.
There is no pressure to act on our advice – you will have as much time as you need, and we will answer any questions you have.
Your capital is at risk so you may get back less than you originally invested. The value of your investments and any income from them may fall as well as rise.