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Pension planning is something that is easy to put on the back burner. It requires thought, research and time, and the whole concept can feel rather overwhelming. It is however, a part of your financial management that deserves attention, and so choosing a plan that suits you should definitely be made a priority. How To Choose First of all you need to compare lots of different options available to you. Different schemes are managed in different ways and have varying contribution limits and annual fees. The investment strategies also need to be looked at. Some funds have a low risk approach to investment while others adopt a much riskier strategy. It is always a good idea too, to check past performance of funds and client reviews of advisers before you make your decision about who is going to be in charge of your pension planning. How is Your Money Invested A pension fund is the pot in which you save your money for retirement. It is, however, more than just a pot. It is carefully managed by experts who invest your money to make it grow. Most advisers tend to spread their investments so that risk can be more diligently managed. Assets include shares, bonds, property and cash. A good pension plan should also be well diversified on an international level which is where a good adviser can add value. Past Performance When pension planning it is wise to check the past performance of your fund choice with the relevant provider, but do remember that all investment brings some level of risk and past performance does not guarantee future performance. Contribution Level How much you decide to pay into your scheme is entirely up to each individual as it depends very much on circumstances, such as your age, how many years you have left before retirement, how much you can actually afford to contribute and also what you would ideally like your retirement income to be. Most advisors would suggest that around 15% of your income should make up the contribution to your retirement pot. Remember that up to £40,000 of your invested money is entitled to tax relief so the more you put away this way, the better. Another tip is to increase your contributions when you get a pay rise. Pension Charges and Exit Fees All plans come with associated charges but these vary significantly between providers. It is important to read the small print and know exactly what you are going to be paying. Some schemes also charge a hefty exit fee (up to 10%) and inactivity fees that you are required to pay if you stop contributing for a period of time; make sure you have all the information before you commit. Access to Your Information Part of your pension planning should include consideration of a provider’s ability to communicate and its ability to offer good service. It’s important that you have access to information and routine reports. Check how companies connect with their clients and if there is an online service that you can use to stay on top of what is happening to your money. Pension planning rarely fits a template: everyone has different requirements and circumstances that need to be accommodated. Providers are experts in the service they offer but it is always a good idea to get advice before you decide exactly which company you are going to trust with your retirement funds. Author Plate Claire Novakovic is the go-to expert for those who need advice on pension planning and other related issues. As a Chartered Financial Advisor, she is the inhouse pension expert for Accudo Investments. Offering comprehensive independent financial advice tailored to each individual’s needs, Accudo Investments provides effective portfolio management and tax strategies to meet the needs identified.
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