We all work hard to build our pension
savings and give ourselves some peace of mind for retirement but how often do
we take time to ask ourselves 'is our pension working for us?'
If you have several pensions with different
providers, maybe it would benefit you to bring
your pensions together. If you aren't on track to have the income
you expected in retirement perhaps it would be a good time to review the funds your
pension is invested in and make some changes. If you have received some
unexpected income and aren't quite sure how to spend it maybe your pension
could benefit from a mini cash injection.
Understanding and reviewing our pension
savings is something we should be doing much more regularly. Pension plans need
some TLC and taking time to consider how to get the most out of your pension
plan can make managing your pension savings easier and ensure your retirement
nest egg is in the best position possible for when you need it.
Follow these tips to consider if your
pension could do with a revamp:
Take stock of what you have in your pension/pensions
Many of us have several jobs during our
careers and this can often mean that we have several pensions with different
providers scattered about. When reviewing your pensions, it is imperative you
look at all your pensions (including any former work pensions or individual
pensions) to be able to see exactly how much you have in pension savings so you
can make accurate projections for your retirement.
When you review the benefits of each
pension you might find that it would be beneficial for you to consolidate your
pensions into one pot. There can also be cash incentives, vouchers or reduced
interest rates if you shop around for the best provider bringing you perks in
both the short and long term.
Maximizing pension savings
The introduction of auto-enrolment in the
last 10 years has meant that most of us who are currently working will have at
least one group pension that both ourselves and our employer pays into. A great
way to maximise pension savings is to increase our workplace pension
contributions for as little as 1% which would make a considerable difference
over time. It may also be that your work scheme rules mean that if you increase
your contributions your employer will also, so this is always worth looking
into.
One of the most tax-efficient ways of
investing money is to pay it into a pension as a lump sum and for many people,
particularly those approaching retirement age, giving their pension savings a
boost with funds they weren't expecting can alleviate the stress they may feel
about the size of their retirement pot.
Review pension pot investments
Pensions are invested in funds that are
often low risk. Therefore, whilst the amount you invest is unlikely to decrease
rapidly if there is a dip in the stock market it also means that it will also
not make large gains.
If your pension type permits you to change
the funds your pension savings are invested in it may be worth researching the
funds available to invest in that could allow you a potentially larger
return.
