No matter what your age or employment situation, one of the most important considerations for your retirement is pension planning. It’s not the most glamorous of subjects, but it’s one that too many people choose to ignore – at their peril. Time marches on and whether you’re looking forward to retirement or feel like it’s too far off to even worry about, you absolutely need to put measures in place so you can enjoy a secure, comfortable and enjoyable life and lifestyle in your later years. |
But there’s no doubt about it: things can get complicated when it comes to this tricky topic, so below are just five basic tips that will get you thinking.
Tip 1. Start Early
Even though it’s never too late to start pension planning, definitely the earlier you start contributing to your retirement, the better – because, obviously, the more you contribute the bigger your pot becomes. Because the growth on your fund is compounded, all those earlier contributions really begin to add up over several decades. But even if you’ve left it a little later in life, it’s still possible to make a big difference by making larger contributions or staying in the workforce longer in order to reach your goals for your retirement lifestyle.
Tip 2. Consolidate and/or Find Lost Pensions
While you might think the more the merrier, sometimes having multiple pensions can actually cost you dearly in fees, management charges and poor growth rates. This is particularly true if some of these plans are older and more expensive than up to date plans, or combined with poorer performing older style funds. A professional financial advisor will review your situation on an individual basis (considering all aspects, including tax ramifications) and you may find that consolidating your funds is the right way to go. You can also check for any lost or forgotten funds you may have in place through the government’s free tracing service.
Tip 3. Claim for Tax Relief
It’s important to make sure you get everything you’re entitled to, and pension contributions automatically receive tax relief from HMRC at the basic rate of 20%. Those paying higher rates of tax will need to reclaim this by submitting a self-assessment form though. A well-managed pension fund can be an extremely tax efficient savings plan.
Tip 4. Remember the State Pension
Even though everyone who has paid or been credited with national insurance contributions is eligible for some form of state pension, this is quite often forgotten in the planning process, but it can make up a valuable part of your pension planning. To find out all the important details of how much you’re entitled to, you can request a statement from the government. Even if you don’t qualify for a full state pension, you can top up your National Insurance Contributions right up until retirement in order to qualify.
Tip 5. Enlist the Help of a Professional
The above considerations are just a small selection of the things you need to consider when you’re navigating this complicated task of pension planning. You can see just from this snapshot how much there is to think about, that’s why it is always best to enlist a professional to help with your retirement and investment services. Not only will they be able to help you set clear and realistic goals so you can enjoy a comfortable retirement, they’ll also save you time and money. Best of all though, you’ll be able to have complete peace of mind that you’re getting the best advice to build a prosperous future.
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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