General Insights
THE RECIPE FOR A GOOD PENSION
On your marks, get set, bake!
It could well be one of the things you choose to spend some of your free time doing during retirement. Of course, you first need to have the funds available to stop working, or at least reduce your working hours, and a pension scheme that is fit-for-purpose should help you achieve this. We take a look at the key ingredients that make a ‘good pension’.
Time
Saving enough money to last you up to 30 or 40 years of retirement is no easy thing! The sooner you start to save the easier this becomes, and the compounding effect of investment growth can have a really positive effect too. It is never too late to save for your retirement, but the sooner the better. You will never regret having saved too much for your retirement!
Get all the help you can
If you have access to a workplace pension scheme, have you joined it and are you paying enough to ensure you receive the maximum pension contribution your employer will make for you? Effectively turning away this ‘free money’ from your employer will likely be your main pension-related regret in later years!
Similarly, are you making the most of available tax and National Insurance savings such as salary exchange (speak to your employer about this) and higher rates of income tax relief, where applicable?
Management charges
Be honest, your pension provider is not doing their job for free and charges can vary significantly. There is a cap on the level of charge taken from the default investment of an employer’s workplace pension scheme (currently 0.75% of pension assets); however, no such cap applies where you have chosen your own investment/s or have your own, strictly private pension scheme. The lower the overall management charge the better, as you will retain more of the investment growth within your pension pot.
Stay on track
Most things in life do not stay the same for ever and the world of pensions and investments is no different. You should regularly review your retirement savings to ensure they stay on track to meet your retirement objectives, which in turn may change over time. It may be a good idea to seek professional pension advice if you do not feel comfortable managing things yourself.
