The UK’s leading business magazine for small and medium-sized businesses, Business Matters, asked Midland Financial Solutions’ Director Kevin Edwards to write a detailed feature outlining to business owners how they can find out exactly how much is in their pension pot(s). If you think you may need to know then, read the published article here (http://www.bmmagazine.co.uk/in-business/finance/19801/do-you-know-whats-in-your-pension-pot/) or read it below.
Do you know what’s in your pension pot?
Unless you’ve been lucky enough to have the same job with an excellent pension all of your life, then it’s likely that you’ll have accrued several different pension pots by the time you reach your fifties. These pensions may be a combination of personal and work-related pensions, and some of them you will only have contributed to for a set period of time before, for example, leaving a company or getting a better pension offer.
This means that, unless you are particularly financially savvy, you may not be quite sure what the value of your pensions are, and how financially comfortable you will really be during your retirement. So how can you find out?
First of all, you need to establish exactly where and what your pensions are. This might sound basic, but you’d be surprised how many of us have forgotten the pension that we had when we were at a company twenty years ago! If, when you think back, you realise that you don’t hold the details for one or more of your pensions, then the Department of Work and Pensions provide a Pensions Tracing Service to help reunite you with your pension pot! (https://www.gov.uk/find-lost-pension).
Once you’ve located all of your pensions then you need to establish what type of pensions you have so that you can find out what level of pension income is realistic to expect, and whether there are any last minute gaps that you need to fill to ensure you are able to achieve the retirement lifestyle you desire. For example, if you have worked in the Public Sector you will have a ‘final salary’ pension or if you have been a company director, you could have an Executive Pension Plan or a Small Self Administered Scheme. If you’ve worked for a company that ‘wound-up’ their pension scheme, you may have a Section 32 ‘Buy-Out’ plan. If it is a Personal Pension, there are a variety of different types, including Stakeholder Pensions, Retirement Annuity Contracts and Self-Invested Pension Plans!
It’s at this point, that most people would benefit from some professional advice. As you’ve probably gathered by now, there’s a reason Chartered Financial Planners are well qualified – it’s complicated! What’s important for you, is that your chosen advisor asks you the right questions and provides you with core information that you will need to be able to make an informed decision. A good financial planner/independent advisor will:
- Take time to understand your circumstances, priorities and financial objectives.
- Help you determine your ‘target income’ in retirement.
- Review your existing plans to establish how they suitable they are in meeting your objectives and advise you as to any action that should be taken.
- Show you what your current pension pots are likely to provide for you and when.
- Determine your State Pension Age and entitlement.
- Show you what level of growth you need to achieve on your pension funds, over the timescale you have available.
- Help you to understand the relationship between investment risk and potential returns and advise you as to how your pension pots should be invested to best try and match your objectives (within your own risk parameters).
- Provide you with regular reviews to ensure your plans remain on target.
- Provide you with advice as to how to eventually take an income from your pension pots.
Most independent advisors will offer a ‘fixed fee’ structure for advice, which will vary depending on the level of advice you require and the complexity of your arrangements, but it can certainly be worth it to make sure you are able to make the most of your retirement, and the money that you worked so long and hard to accumulate.
However, if you’re still keen to pursue your pension arrangements independently, then why not check out our article on a ten pension pitfalls below to help you ensure have considered many of the common risks. Visit www.midlandfinancialsolutions.co.uk to find out more.