Large pension pots

What to do with your pension assets

Years ago, if people were lucky enough to own their own homes, and even better to have paid their mortgage off by a reasonable age then their house was likely to be their most valuable asset. A couple of generations ago the state pension was relied upon as the main source of retirement income for many folk, and at the same time having personal pensions was a rarity few could afford or be willing to pay into.

Personal pensions as we know them today were only available from the late 1980’s and since then we’ve also seen the introduction of a more robust workplace pension scheme landscape. Coupled with greater consumer understanding and access to information through the internet, pensions and lifetime savings have established themselves as the default investment for many people to save for their retirement. Since the introduction of pension freedoms during the mid-10’s we’ve also seen greater emphasis and importance placed on how pensions are used in retirement.

At MyRetirement we see and hear from many people for whom the value of their pensions has overtaken that of their home. Consumers are increasingly aware of the importance of making good decisions ahead of retirement, with a growing sense of responsibility to plan ahead and make the most of what they have.

With that in mind we’ve put together some tips to help you get thinking about how to keep your pensions in good shape…… 

Don’t put all your eggs in one basket!

“It’s an oldy but a goody” and never far from the mark. Any sound financial plan will be built with diversification in mind. Relying on any one thing, whatever that may be, has rarely proved to be a good idea.

You only need to look at the traditional investment types illustrated by this diagram which shows just how the investment returns across the different asset types varies from year to year. No one really knows what’s going to happen to the economy and at MyRetirement, our experts are perfectly placed to match your investment goals and preferences to a suitable longer term strategy, ensuring you’ve set aside enough to cover your more immediate needs with a balanced and diversified investment portfolio.

Give your pensions a yearly once over

Regular financial reviews are a crucial part of a successful long term retirement plan. Financial planning works best as a collaborative process involving client and adviser, which can provide an unbiased, thought-provoking view of your current and future position. It stands to reason that even minor improvements can make significant impacts with larger funds over a longer period of time.

Taking time out to review what you have, make improvements where necessary, and ensuring you are setting meaningful and sustainable goals will leave you feeling more in control and at ease with your plans. Basic tasks like paying more attention to your annual statements (rather than adding them to the bottom drawer!) will help to improve understanding and awareness.

Our retirement experts are able to offer a yearly review service which gives you access to their expertise and guidance, along with any further advice when your circumstances, the economy, or the legislation changes. They will also provide you with re-assurance and appropriate challenge to set realistic and sustainable goals for the future.

Try some modelling!

Not the catwalk type before you start to get nervous! Most financial planners have access to the latest technology which allows them to model your specific retirement goals, looking at how your assets, including your pensions, can help to meet your expenditure needs as you progress through later life. This would help to plan with an element of greater confidence that your assets will be sustainable for your lifetime, taking account of your needs and that of your dependents and family, if applicable.

Helping you with this process, which is sometimes referred to as Cash Flow Modelling, an adviser is expertly placed to apply certain conditions and scenarios to produce a future plan showing how your wealth might meet your needs.

Check your allowances and keep an eye on those tax traps

You may not be thinking about it, but more and more people are increasingly likely to accumulate pension wealth which gets closer to the pension Lifetime Allowance (LTA). The LTA is the total amount of pension savings that you can accumulate without incurring further tax charges at certain points in time. Now, this is a fairly complex situation which we cover in more depth in the following article: Mind the Pension Traps

Don’t be put off putting more into your pension if you can – it can be hard to find the spare cash at times, but early, regular and sustained contributions can make all the difference between a basic and a more comfortable retirement. If you’ve got concerns in this area then help is at hand to add some reassurance to your planning, and even explore other options to save for your future

Whatever your situation, or if you just have some further queries you’d like to chat about, then our retirement experts at MyRetirement can provide you with a complimentary initial consultation to discuss your retirement needs.