1. Get Advice
A private pension assessment by an independent financial adviser, like Pension Works, does more than just give you peace of mind or present you with a list of figures. It can be a real help to your retirement planning, and could save you money. If your pension savings are being eaten up by hidden fees, a pension assessment will check if you’re getting the best deal. The financial adviser can also review your investments to check whether switching funds might earn you more money over time.
2. Consider the Options
Pension freedom now offers a greater range of choices. Pension drawdown allows you to withdraw money as and when you like, and potentially keep growing your pension pot by continuing to invest during your retirement. This is normally an option in a defined contribution pension, but you need to plan this carefully. If you choose to buy an annuity to provide you with a guaranteed income (either fixed term or for life), then there is still a range of options to consider to make sure you get the best deal.
3. Think about risk
Risk is part of any investment. If you invest in the stock market, for example, you’ll know that a high risk investment could potentially earn you lots of money, but there’s also the chance for a loss. Pension funds can be at different levels of risk depending on how much you can afford to take. Further from retirement, you may be able to take some risk as there is more time to make up for any losses. Closer to retirement, however, you are likely to take less risk as you cannot afford any losses just before you start accessing the pension. If you have taken advice, or are already experienced investor, a self-invested personal pension (SIPP) could be a potential option. This gives you a bigger range of investment options, such as stocks and shares, which can potentially increase your pension value if you are happy with the extra risk: remember, investments may go down as well as up.
4. Consider consolidation
If you have worked for more than one company, you potentially may have more than one pension pot. There are many reasons to consolidate. Not only could it make it easier to monitor your investments for your retirement planning, it could help you secure a better deal. If your money is stuck in a pension fund that charges high fees, or offers a low growth rate, it’s a good idea to move it. An independent financial adviser, authorised and regulated by the Financial Conduct Authority such as our team at Pension Works, can help find a more suitable pension fund for you and your savings.
5. Save, save, save
In the end, though, it’s your money – and no matter how well your pension performs or how good the growth rate on your pension fund, it all comes down to what you put in. A pension is an investment like any other. Adding even a small amount to your regular contributions can produce a major gain in your overall pension savings. You can also get into the habit of investing any extra funds into your pension pot. Instead of getting used to that pay rise, invest it into your pension fund. Likewise, if you finish paying off a debt (like a car loan or even the mortgage), save the extra cash into your pension, rather than getting used to the extra spending money. It will benefit you in the long run.