Pensions are an integral part of financial planning, and as the holiday season approaches, it’s good to take stock of what a retirement investment plan looks like.
“Your pension will seldom have its hour at the top of your to-do list, but finding the time to tick off a little bit of life administrator can help you start the New Year feeling lighter and more organized,” he said. declared Becky O’Connor, Head of Pensions and Savings, Interactive investor.
Data from the stockbroker suggests that a high number of people check their Self-Invested Personal Pensions (SIPP) during Christmas week.
“‘Twixmas’ – the week between Christmas Day and New Years Day, might be just the time for a little ‘penmin’, ie: the pension administrator,” said O’Connor.
She shares her top tips on how to tick off your retirement to-do list:
Get the app
Log into your pension, online or on the app, if you have one.
If your provider has an app you don’t yet use, downloading it now could help you prioritize your retirement next year and beyond. You can do this for current and old occupational pensions.
Find out about old pensions
Checking old job pensions can help you consolidate your pensions in one place.
Consolidation can make it easier to administer your pension when you retire. It can also help you avoid fees and look for a wider or better choice of investments available elsewhere.
It may also be more convenient to be able to tap into a single pot when you reach retirement age.
However, not everyone can move their pension, because certain benefits or guarantees prevent it. So it’s worth checking this out if you plan to move your pots to one location.
Check the amount of your pension
Checking how much is in your fundraiser and looking at how much there was a year ago can be a good reminder of where your retirement is going and give you a clearer idea of ââthe difference a year can make.
“It helps to separate the part of the growth from returns on investment, from your own contributions, from your employer, and from tax breaks, to give you a better idea of ââthe value of all of them. these elements. of your overall pension, âsay the experts.
âIf your pension fund hasn’t performed as well, check the asset classes and sectors it’s invested in that pulled it down. This could be an incentive to change the focus of your fund. , if that’s an option for you. “
Consider increasing your contributions
If it was easy for you to contribute at your current rate, you may be able to afford a little more.
this is an important consideration if you have not yet maximized your employer matching program. If you invest more, check to see if your business will as well and what is the maximum amount your employer will contribute.
Use a retirement income calculator
This can help you determine if your pension is likely to provide you with a decent retirement income.
The Pension and Lifetime Savings Association (PLSA) recently suggested that Â£ 20,800 ($ 27,464) per year, including the state pension, is enough for a decent income in retirement, experts said.
This equates to a pot worth around Â£ 300,000 when you retire, assuming you will receive a full state pension.
Checking out if you’re on the right track and if this amount is right for you or if you think you need more in retirement can give you an idea of ââhow much you might need to increase your contributions.
Consider switching to a more or less growth-oriented fund set
It depends on your own risk appetite as well as your age and retirement plans.
âGenerally speaking, the younger you are, the more risk you can afford to take because you have a lot more time until retirement. But even for older retired investors, a higher proportion of equities may have their place, especially if you keep some of your pension to be left with relatives, or you don’t plan to retire for some time. time, âthe experts said.
“Remember that even though inflation is relatively high, in order for your pension to continue to grow at a higher rate than the price, you will need to invest some in higher growth stocks.”
Check if your fund is sustainable
If your pension plan offers a sustainable option that appeals to you, instead of your current plan, it’s usually quite easy to switch within the same plan.
Fill out your “Expression of wishes” form
According to figures from Interactive Investor, only around 15% of retired clients have completed these forms.
They allow you to designate who should receive your pension upon your death. “This is important because defined contribution pensions are not part of your estate and therefore are not covered by your will,” the experts said.
Think about your retirement age
It’s a good idea to consider the age at which you would like to retire, as well as what you would do if you had to retire early. plan for the future.
You will be able to access your private retirement from age 55, but unless you have been very focused on pensions, it is unlikely that you will be able to retire at that age. Your state pensionable age could be between 66 and 68, depending on your current approach to retirement.
“Find out if ISAs could also help you plan for retirement, taking into account your current taxpayer status, the age at which you plan to retire and the likely taxpayer status when you retire,” said the experts.
âWith ISAs, you put in after-tax income but don’t pay income tax on what you get out of it; with pensions, you do not pay tax on contributions but will be liable for tax on withdrawals. , after claiming your 25% tax-free lump sum. “
Check your state pension record
This will show you if you are on track to receive a full state pension. You can do this on the government site using a government gateway.
If you’re worried about being late, you can fill in the gaps in your national insurance record with Class 3 or Class 2 contributions.