Worried about your pension? Get on top of your financial fears with these expert tips from pension and wealth expert John Boss from Aegis Financial Planning
Tip 1: Find out where you stand
It’s difficult to plan ahead if you don’t know how much your pensions are worth, and how many pensions you have. ‘The first thing is to establish what pensions you have already, then look at what income you need in retirement and establish any shortfall you may have,’ says John. If you don’t know who a pension from a previous employer is with, get in touch with your former employer and ask if they can help.
If you aren’t able to contact your previous employer for any reason (perhaps they are no longer in business), you may still be able to trace your pension. ‘With a little bit of information investigation is possible,’ says John. ‘Basic information on previous employers, previous residential addresses and national insurance references can help in tracking it down.’ There are companies that will help you do this, and you could also try the government’s Pension Tracing Service, a database of pension providers.
Tip 2: Get your pensions reviewed
Speak to an advisory pension firm and ask them to carry out a review of your pensions. Some firms may charge for this service and it’s best to have the money conversation in advance so that you know where you stand. ‘Advisory firms differ in this regard. Some will charge, but others like ourselves offer a complimentary review at our expense,’ says John. ‘It is important to understand if there are review fees and these should be disclosed prior to an adviser starting the review.’
John makes an important point about the role of the adviser you choose to hire. He says: ‘Note the difference between an adviser obtaining a transfer of agency, which allows them to receive ongoing advice fees, and a Letter of Authority, which only allows them to gather information. We would suggest the latter until such time as you are sure you wish to work with the adviser concerned.’
Tip 3: Increase your annual pension contributions
Even if you can only top up your contribution by a small amount each month, this will make a difference in the long term. ‘Small increases of even five per cent per annum can make a huge difference,’ says John.
Tip 4: Keep on top of how your money is being invested
Don’t just let your pension expert invest your money without knowing more about where it is going and the logic behind it. ‘Most investors are very laid back when it comes to asking questions about where their pensions are invested and why,’ says John. ‘This could be for a variety of different reasons, such as being too busy or a lack of financial knowledge. However, you should ask your adviser why they have made the investment decisions they have made and keep asking them at each review. You should also ask for information about the different investment sectors and how they work so that you have basic knowledge on where your pension monies are at any given time.’
Tip 5: Consider combining your pensions into one
This may be worthwhile as it can reduce costs as you only have to pay one policy or platform fee instead of multiple fees. John says: ‘It assists people in keeping track of how their pensions and indeed advisers are performing. More sophisticated pensions like Self-Invested Personal Pensions (SIPPs) also offer access to a much wider range of investment opportunities than a standard pension plan.’
Tip 6: Monitor your pension fund annually
Once you have had your pension funds reviewed and know what you have, keep an eye on your pension to make sure it’s working for you. Be prepared to seek advice on moving your money if need be, and have it reviewed annually.
Finally, if you are worried about your pension funds being insufficient to cover you in retirement, try not to panic. Deal with the situation head-on and you may be pleasantly surprised with the outcome. ‘Don’t panic or make any rash decisions, or ignore the issue,’ says John. ‘In our experience, it is never usually as bad as you imagine, and there is usually something that can be done.’ That said, time is of the essence, so don’t delay dealing with the situation.