Pensions are constantly in the news.
With George Osborne’s March 2015 budget allowing access to pension pots and then further changes in the lifetime allowance announced in his summer budget of 2015, planning for your future can become confusing. Here are 7 ways to get ahead and get the most from your pension plan.
Experts exist for a reason, they can advise from a basis of knowledge and experience. If you’re confused about what you can expect from your pension plan, or worried that your investment portfolio is underperforming, it’s time to get in touch with the experts. Whether you choose to consult the Citizens Advice Bureau, or the government’s own Pension Wise scheme at least you’ll be better informed and able to make important decisions about your future.
Assess your future
You can’t plan unless you know exactly how much your pension is going to be. You might have opted out of the State Enrolled Pension Scheme (SERPS), in the distant past, in favour of a private company investment scheme, you might then have left that particular company and forgotten about your pension. The pension tracing service can help you if this is the case, then you can add this figure to your other pension plans in order to calculate how much you’ll have to live on in retirement.
If you’ve done the sums and are concerned about your future financial prosperity, this is a good time to see if you can afford to contribute more to your retirement plan. If you’re paying into the state pension consider whether it’s worth topping it up. As people are living longer and are more active, you need to ensure that your retirement plan will cover all of your future adventures.
Watch out for hidden fees
A recent article published in The Independent warned that an increasing number of those planning to access their pension pots were being hit by unexpected fees and costs. The chief economist of the Bank of England has also stated that pensions have become so confusing that even he couldn’t understand all the ramifications. If you want to get ahead and receive the pension that is rightfully yours ask questions, it’s your money.
Don’t leave it too late
In an increasingly uncertain financial world, the knowledge that you have a secure pension plan should provide some comfort. It’s never too early to find out if you have enough money invested in your retirement plan. Use a pension calculator to discover if you have put by enough money to cushion you in later life.
Take advantage of pension tax relief. As a result of the recent recession governments all around the world realised that people weren’t saving enough for their future. The UK government has encouraged greater tax relief to encourage all bands of earners to invest in their pensions. The tax relief rises the higher your income band. The lifetime allowance for pensions has also changed.
After April 2016 the allowance has been reduced to £1 million. This means that anyone who has over this amount in their pot will be liable for tax of 25% if paid as a pension or 55% if you decide to take the whole as a lump sum. Fixed Protect options can help you if your pensions savings come into this category.
These bonds sounded like such a good idea when they were announced but reports in The Independent and other sources show that the interest on this bonds has halved. If you have investments it’s always important to see how they are performing and be prepared to look at other investment options.