Jason Explains Why It Pays to Carefully Check Your Pension Statement - with Esther Shaw for compareandinvest.co.uk
The original article was published on compareandinvest.co.uk on 15th November 2024.
As part of our mission to empower as many people as possible to make better financial decisions, we have published below all the information Jason shared with them, so you get the maximum benefit from it (not just from what was published).
FIVE IDEAS THAT JUMP OUT AT ME ARE
Check what charges you are paying
Check whether your fund choice is appropriate
If accumulating – work out whether you should pay in more
If retired – work out if your withdrawal rate feels sustainable
Check of your expression of wish / nomination of beneficiary is up to date
No doubt there are others!
I’ve put some comments on a few of those below.
WORK OUT WHETHER YOU SHOULD PAY IN MORE
Look at what you are currently paying in and think about how much you can afford to save for the longer term. Try not to just rely on auto-enrolment default contribution levels.
Pensions can be one of the most tax-efficient ways of saving for your retirement. To get the most benefit from the system, your optimal contribution level may vary from year to year.
Take a bit of time to understand your income position because that determines how much you can pay in and what pension tax relief you can achieve.
It’s also worth remembering that pension contributions can become increasingly attractive as you near the end of your career, partly because you are probably at your peak earnings level and partly because you are closer to the age when you can actually draw on the money, so it isn’t locked away for so long as for someone in their 20s or 30s.
CHARGES
Look at what you are paying in charges. Cost, the lower the better, is recognised as one of the key drivers of long-term investment returns, Fortunately, it is one of the variables of investing that you can control.
Make sure that you are not invested into expensive funds and, within reason, aim to pick from amongst the lowest cost funds available to you from your pension provider. If that still looks expensive, consider changing pension provider.
EXPRESSION OF WISH
Check to see whether you have given your scheme an expression of wish (sometimes called nomination of beneficiary) instruction.
At present, pensions don’t generally form part of your estate and so are not covered by your will. To avoid ambiguity and delays, this instruction tells your scheme who you would want to receive your funds in the event of your death.
If you did this when you first started your pension, a lot could have changed since then!
GET IN TOUCH
If you would like to discuss any questions you have around your own pensions, your pension statements, or any other help you need to plan your own financial future, please call us for a free consultation on 020 3488 9505.
The value of your investments can go down as well as up, so you could get back less
than you invested.
Tax and Estate planning is not regulated by the Financial Conduct Authority.