Take control of your Pensions towards retirement. 

Written by
Laura Robinson
Time to read
7 minutes, 1 second

 

Investing towards a comfortable retirement is one of the most common investment goals, and what you do with your Pension today could enable you to potentially retire more comfortably.

Take control of your Pensions with these useful tips to do more with your money.

1. Look for your lost Pensions

Over the course of a long career, you may accumulate several Pensions. It could be the case that each different employer you have assigns you a new Workplace Pension that you pay into.

You may end up losing or forgetting some of these Pensions and over the long term these lost pots could be worth significant amounts.

Even if you think any forgotten Pension pots only had a little money in them, consider that these investments may have grown over time. You need to have a careful consideration if you could have lost or forgotten Pensions, what was once a small pot may be something more substantial today.

The total value of lost Pensions is estimated to be £26.6 Billion, with three million Pension Pots not matched to their owner [1]

When tracking down your lost pensions you can explore two routes. The first would be to track these down yourself by getting in touch with a company like True Potential, using our dedicated Pension Finder Service.

The second option would be to track down the lost pensions yourself. If you know the provider of your old Pensions, get in touch and they should be able to help you trace your Pension.

For Workplace Pensions, contact the HR department of your previous employers, they should be able to point you in the right direction.

There’s also a government pension tracing service which may useful. A conversation with your financial adviser could also be a good idea, they may be helpful in having the industry expertise to find your old Pensions.

2. Consider consolidating your Pensions

You’ve found your lost Pension, what’s the next step?

It may make sense to consolidate your Pensions into one Pension. Why? You may be paying multiple fees across multiple Pensions. You can potentially preserve more of your money by consolidating into one Pension and having just one charge.

You should also consider that multiple Pensions may mean you aren’t invested in the appropriate Portfolio based on your attitude to risk. Regularly taking an attitude to risk assessment could be a good idea, which can typically be done online with your investment provider, or through a financial adviser.

Transferring and consolidating may not be suitable in some cases, you may be invested in Pensions with valuable benefits such as guaranteed annuity rates, protected higher tax-free cash percentages and low charges that would be lost on transfer. Speak with a financial adviser if you aren’t sure.

3. Consider attitude to risk and if your details are in date

Looking at your investment is a good idea on an occasional basis to ensure you are still invested in an appropriate Portfolio with an appropriate level of risk. You should also look at your investment whenever you have a change in circumstances, this enables you to assess if your investment is still suited to your circumstances.

You could take an annual risk assessment questionnaire to determine if you are still in the correct Portfolio for all your investments and Pension pots, as your attitude to risk may change overtime and it is crucial to ensure that you are in a portfolio that reflects your attitude to risk. You could potentially do this as part of your online investment account or with a financial adviser.

When looking at your investment, also take the time to ensure your latest details are up to date, such as your contact details and an up to date expression of wish to name who you’d like to benefit from your Pension in the event of your death.

4. Track your investment

Tracking your investment could be a good idea at occasional intervals to check on if you are closing your gap to goal.

This can help you to think about if you are on track towards a sufficient Pension pot, helping you to determine how long you may need to invest for and how much you may need to invest monthly with what assumed rate of growth to reach your retirement goal.

5. Increase your contributions

One of the simplest ways to retire potentially more comfortably could be to increase your contributions today if you can afford any extra disposable income.

With True Potential you can also impulseSave® and top up from £1 at any time. If you have any spare change why not invest it into your Pension and potentially grow it into a more significant sum over a long term period? Keep in mind that with investing comes risk, and you may get back less than you initially invested as past performance isn’t a guide to future performance.

Increasing your contributions could also make sense from a tax efficiency point of view, as you’ll be able to keep more of your money through government tax relief on eligible contributions.

6. Are you on track to a comfortable retirement?

If you’ve considered all of the above steps, then you should be able to have a fairly good picture of what your Pension pot may look like with enough years of investing and potential assumed growth. Will this be enough for a comfortable retirement?

Every single person will have a unique set of circumstances and needs, and there are unpredictable factors around how long you’ll live or what level of care you may need to pay for in later life. It could be worth speaking to a financial adviser to assist you in determining how much you may need annually in retirement.

Don’t underestimate how expensive life could be in retirement, consider how you could invest more into your Pension if in doubt.

7. Plan ahead for how you’ll take your Pension

A successful retirement isn’t just about investing for a long term period. When you reach your retirement age it will also potentially make a big difference to your wealth depending on how you choose to take your money.

There are numerous ways you can utilise your Pension pot, for example:

  • Flexi-access Drawdown, which allows you to take up to 25% tax-free and use the rest as a monthly income that remains invested
  • Staying invested, you can keep your Pension invested if you do not need to access it yet
  • Taking a lump sum, which allows you to take the Pension pot in one go, which you may pay tax on 75% of
  • Annuity Purchase, which allows you to exchange your pension pot for a guaranteed income over a number of years

Different options are suitable for different people and you should explore all options to ensure you retire in a way that is best for you. You can read over these options in more detail with free independent services such as Pensionwise’s Open market options pack.

A financial adviser will be able to assist you with deciding upon the best option for you and can look into a sustainable annual withdrawal rate for your situation and needs in retirement.

8. Plan ahead for how your Pension could benefit the next generation

Your Pension can have a lasting legacy if you choose to name beneficiaries within your Pension’s expression of wish. This is easily done through your Pension provider, and with True Potential is simply done through the True Potential app.

Why should you name beneficiaries? Because money passed through a Pension isn’t normally liable to inheritance tax, making it a tax efficient alternative to leaving money through your Will.

Your beneficiaries could choose to keep your Pension invested and potentially growing into a greater level of wealth.

Don’t miss out, what you do today can make a difference to your retirement. The earlier you get going with investing, the more effective your investment could be. Little and often investing from an early age could be more impactful than making larger investments later in life. Take control of you Pension today.

With investing, your capital is at risk. Investments can fluctuate in value and you may get back less than you invest. Past performance is not a guide to future performance. Tax is subject to an individual’s personal circumstances, and tax rules can change at any time. This blog is not personal financial advice.

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