Pension Management

How Do I Make My Pensions Work Harder?

Accessing your pensions at 55

Thanks to a change in the law in 2015 which gave us more pension freedom that we’d ever had before, you can now make changes to your pensions so they may perform better for you in the years leading up to your retirement.

This means you can evaluate any old or dormant workplace pensions you have accumulated and have the opportunity to transfer them to a better performing fund. 

You can also consolidate any smaller personal pensions to maximise the value of your total pension pot. 

How do I find out how much my pensions are worth?

The first step to maximising your retirement savings is getting a handle on where your pensions are and finding out how much they’re worth.  

Remember we can help you locate your pension savings and work with you to increase your potential retirement income. 

Tracking down your workplace pensions

If you’ve worked for a number of companies during your working life, it’s likely you’ll have paid into a few workplace pension schemes along the way. 

It can be hard keeping track of all your different pensions pots over the years, especially If you’ve moved around a bit.  Plus, if you haven’t passed on your new address details to those pension scheme managers, you may not have received your annual statements.  

This means you won’t know the current value of your pension or how much you could receive as a lump sum or retirement income when they mature.

Tracking down your previous workplace pension schemes can be time consuming, we can write to your pension providers for you to save you time.

In the meantime, you can make a start by writing a list of your past employers and their contact details.  Check your files for old statements and payslips and make a note of your employee numbers, pension plan numbers and the dates you joined the scheme.  

A pension scheme manager will also need your date of birth and National Insurance number to verify your identity.

Personal pensions

If you have personal pensions your providers will send you an annual statement that shows the current value of your plan and how much retirement income you can expect to receive.  

Today, many personal pension providers give their clients access to their pension information online or more recently, via a mobile app.  This means you can check your pension value any time you like. 

If you haven’t been given online access yet or haven’t received an annual statement, contact your provider as soon as possible to ask for an update.  

Make sure you have your plan number, starting date and national insurance number to hand before you call them.  To save time, we can contact them for you. 

If you don’t have many details about your personal or previous workplace pensions, you can try using the Government’s free Pension Tracing Service. https://www.gov.uk/find-pension-contact-detail

The most important thing to do once you’ve located all your pensions is to work with an experienced financial adviser and pensions expert.  A good financial adviser will examine each of your pension schemes with a view to maximising your total pensions value. 

At this important stage, receiving the most suitable financial advice is crucial.

Making your pensions work together 

Following a thorough review of your pensions, you may find some are best left where they are until they mature.  

This most applies to defined benefit schemes (also known as final salary pensions) because they are based on a portion of the last salary you earned from that employer.

However. if some of your workplace pensions are ‘defined contribution schemes’, these may be worth transferring to a personal pension. This will all depend on their value now and the pension income they could give you if they were moved to a different pension provider.  

One benefit of consolidating your pensions means having just one set of pension management fees to pay.

As part of the review process, we will look at a range of annuity rates across the whole of the market to consider whether buying an annuity would benefit you.

All of this is dependant on your individual set of circumstances. 

How do I transfer a pension?

It is highly recommended to seek advice before transferring your pension.  

If you are considering transferring some of your old or dormant pension funds, you should get expert advice to make sure you get the optimal value for money when transferring your funds. 

The main elements we would consider when it comes to transferring your pensions would be the transfer value, exit fees, special features such as guaranteed annuity rates, your right to a tax free lump sum, and which provider to transfer them to. 

Be very aware of pension scams. If you are contacted unexpectedly by someone offering to transfer your pension it could be a pension scam.  

What if I’m not ready to retire?

If you have a few more years to go before you reach 55, or you’re not ready to retire yet, there are a number of ways you can increase the value of your pension pot while you are still working – including your state pension.

Make more contributions 

If you still have a couple of years to go before you retire, you could opt to use some of your salary to make additional pension contributions into your workplace pension fund.  This is known as ‘Salary Sacrifice’.

By sacrificing some of your salary to your pension you would gain threefold.  Not only will your own contributions boost your pension, your employer’s contributions will go up too.

If you are a basic rate taxpayer, you’ll receive an additional 20% tax relief on the extra you’re paying in.  If you pay tax at a higher rate, you’ll receive tax relief at that rate.

You could also pay more into your personal pension and receive 20% tax relief on your additional contributions. 

How to increase your state pension 

Did you know you can defer your state pension?  If you can afford to live without your state pension when you reach retirement age, you can defer drawing it.  For every nine weeks you don’t draw your pension, you increase it by 1%. 

As part of your pensions review, it’s worth finding out how many qualifying state pension years you’ve built up.  To receive the full state pension you need 35.  

You can find out how much you’re entitled to and your state pension age at gov.uk/check-state-pension.  Alternatively complete the >BR19 application form< or call the future pension centre on 0800 731 0175.

Semi-Retire to keep saving

Another way to keep your retirement savings growing is to carry on working.  That might not sound like much fun, but you could work part time and enjoy the best of both worlds.  

This means having more personal time while maintaining a regular income for your day to day expenses, and drawing money from your pension fund only when you need it.

How do I create a budget for retirement?

Having a good idea of how much money you’ll need to live on when you retire makes a lot of sense.  The sooner you can do this, the better understanding you’ll have of how hard you’ll need your pensions to work for you.

You can create a budget easily by writing down how much your expenses are now, and what you anticipate they will be when you retire. 

It’s important to Include all your main household bills like council tax, mortgage or rent and utilities, plus your living costs like food, travel costs such as car MOTs and servicing.  Add any debt you will still owe like credit cards and loans.  

It’s important to add how much you’ll need for incidental costs for family and friends, such as birthday presents and for the unexpected expenses, like a car repair or vet’s bill.

>You can download a free pension budget worksheet from the Money Advice Service<

How can Spectrum help?

We can help you gather all your pensions information together and review each of your pension plans to reveal their true value.  

We’ll go through everything with you and help you make the most suitable decisions so your pensions work harder for you so you can make the most of your retirement savings.