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Your Money > Pension Planning Articles > Time for a...
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By Sarah Modlock Dodging the dentist will probably end in tears. Any niggling pain is likely to make your teeth hard to ignore and your dentist impossible to avoid. Sadly, the same is not true with your pension. Your pension wont wince in pain when it becomes under-funded. Review your retirement plans Retirement planning is not a one-off job. Once you have started a pension or other retirement savings, you should review your plans regularly - ideally every year - to make sure you are contributing enough to provide the retirement income you want and that you are saving in the right way. You should also review your pension if your circumstances change. For example if you get a new job, become self-employed, marry or get divorced. If the pension system changes, as it did this April, you will need to find out whether you are affected by the changes, how you should respond and how quickly. To visit the Yahoo! Finance Pension Centre click here What pension provision do you have? Take stock of the pensions you already have, including those that have stopped paying into. You could have one or more of the following:
If you are not sure which of these you have then check your paperwork and contact the pension provider, talk to your employer or Human Resources department, talk to your pension provider or an independent financial adviser. If you started your pension plan before June 1988, you may have a retirement annuity (also known as RAPs, SERAs and Section 226 buy-out policy). You may have a top-up pension plan such as an AVC (Additional Voluntary Contribution) or an FSAVC (Free-Standing Additional Voluntary Contribution). If you've lost track of any old pension schemes you belonged to, contact the Pension Tracing Service on 0845 6002 537 Why do I have more than one pension? If you have left a job which provided an occupational pension scheme then you can preserve your pension by leaving it with that employer. You will need to check your options with your employer or pension scheme trustees. Usually, there is no need to stop paying into a private pension just because you change jobs or stop work. But, if your new employer runs an occupational pension scheme, this will usually be a better way to save for retirement. To visit the Yahoo! Finance Pension Centre click here Your retirement age Retirement age - when you start taking the benefits from your pension, rather than when you stop working - is becoming more flexible. You can take your pension from age 50 from a personal or stakeholder pension and you don't have to stop work to start drawing the pension. You can draw your occupational pension from age 50 if the scheme rules allow and since 6 April 2006 you are able to draw a pension from your employer's occupational scheme and carry on working for that employer, subject to the employer changing the scheme rules to allow this. By 2010 the qualifying age for all pensions will be 55 years. However, the exact timing of this depends on each pension scheme, so you may wish to check the scheme's administrator. What you could get from your pension You should get a statement every year showing how much you have contributed and by how much your pension fund is likely to grow. If you can't find the latest statement, ask your HR department or pension provider for it. If you belong to a money purchase pension scheme (usually one which is not salary related), the statement shows how much pension income you might get, based on the value of your pension fund today taking account of future payments into your plan, how the funds might grow, future inflation and pension income from your fund when you retire (called an annuity). This is only an illustration, not a guarantee. Nobody can be certain about future investment returns, interest or inflation. If you belong to a salary-related pension scheme, the statement sets out your pension worked out as a percentage of your salary now. Salaries tend to increase by at least as much as inflation, and sometimes by more, so your forecast pension should maintain its buying power too. Use an online pension calculator to work out how much you might have when you retire, based on what you are saving. Click here to use the Yahoo! Finance pension calculator. What will the State Pension deliver? A State Pension forecast will tell you how much you might get based on current State Pension rates. Under current rules, the State Pension is automatically increased each year by at least inflation, so the forecast pension maintains its buying power. Contact the Pension Forecasting Team on 0845 3000 or online: www.thepensionservice.gov.uk What other factors should I consider? Obviously, the amount you pay into your pension is key. The rules here are to save as much as you can as soon as you can so that the fund can grow over as much time as possible. Think about what savings, investments or other assets you have or are likely to have approaching retirement and whether your partner will have a pension. Once you've got all the figures you'll be in a better position to see if you'll have enough money in retirement or whether you'll need to top up your pensions. Don't forget that your pension is probably the most complex financial product you have. It's also one of the most important so getting professional, independent advice is crucial to help you plan for retirement. Useful Links
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