Pension Review

Why you should regularly review your pension options

It’s really important that you don’t think of your pension as something that ‘just happens’.

You’ve worked hard. You’ve worked for a long time. You deserve a great standard of living in your retirement – to enjoy that little nest egg and the finer things in life.

And that’s why it’s important to keep a close eye on your pension and review it throughout your working life – and especially in the years approaching retirement. Your existing pension might look ok, but could there be better options out there?

We’re all different and have different pension needs. Off-the-shelf options are all well and good, but you could have specific needs that require more bespoke pensions advice.

A pension advice specialist will help you review your pension and keep you up-to-speed with pension solutions that could really work for you and what you need.

Here, we take a look at what a pension is and what it could potentially do for you in retirement.

Pension Withdrawal

What is a pension and why is it important?

You often hear people talk about pensions in a very casual, matter-of-fact manner, as though they’re totally self-explanatory. But are they?

The basic idea is pretty straightforward. A pension scheme is a type of savings plan that helps you to save money for later life and retirement. It also has favourable tax treatment compared to other forms of savings.

It’s worth understanding the benefits of saving into a pension scheme, because your State Pension – while providing a foundation – may not be enough to live on.

For 2020/21, the maximum UK State Pension – even if you’re eligible – works out at just £175.20 a week or £9,110.40 per year, which is a lot less than most people hope to retire on.

A range of varied and attractive pension options have become available since the 2015 Pension Freedom reforms.

Some of the best-known options range from annuities to income drawdown, and from lump sums to SIPPs (Self Invested Personal Pensions).

But millions of people across the UK leave pension planning too late, and aren’t saving enough to give them the standard of living they hope for when they retire.

We would encourage people to start thinking about their pension and retirement planning as soon as possible to give them the peace of mind that they will be able to enjoy their retirement in comfort.

Do people review their pension options?

Price comparison websites have helped transform the way that people choose their utilities, car insurance, mobile phone and credit card providers.

Is your current provider giving you the best deal? Does this package best suit my needs?

This is important, because otherwise people could be stuck with the same arrangements for years, not knowing that there are better or more suitable ones out there.

Similarly, it’s a very good idea to regularly review your pension options. Perhaps the one you have in place was the best option for you when you first chose it, but new circumstances mean that it’s not quite such a good fit?

Maybe you took the first option that presented itself to you, but have heard that there are more flexible and potentially suitable pension options out there?

Unfortunately, too few people in the UK review their pension plans on a regular basis. Also, not enough people know how their pension works or understand the associated charges, risks or benefits of changing to a different plan.

Who should review their pension options?

The pension landscape has changed a great deal over the years, especially since the Pension Freedom reforms of 2015 opened the door to a far greater range of flexible pension options.

You may think that the pension plan you’re already enrolled in is still the right one for you, but it’s certainly worth checking to see if it is.

Too often, people reach retirement having not regularly reviewed their pension plan, and find that the amount they’ve accumulated doesn’t live up to their expectations.

There is the very real possibility that your chosen plan may have become unsuitable for your situation years ago.

Working people often leave it to the years in which they are approaching retirement to review their pension options, but it’s advisable to start looking at your pension plan – and reviewing the one that your employer might have auto-enrolled you onto – as early in your career as possible.

Equally, if you are indeed in the final years of your working career and approaching retirement, then it’s definitely worth reviewing your pension plans to see if the plan you have is still the best one for you.

The advantages of regularly reviewing your pension

As we’ve established, your pension is the income you will live on when you finish. You’ve worked hard, so your pension plan should be working hard for you in return, to ensure that you’re able to live the comfortable lifestyle you deserve.

If your pension plan has been following the same investment path since day one, it could be that your retirement pot isn’t quite as substantial as you might have hoped – and won’t fund the kind of retirement you were hoping for.

So, this is where the benefits of regularly reviewing your pension plan comes into play. For example, you may find that what you currently pay in annual fees for a number of separate pension funds could actually be transferred into one single fund with lower management fees.

Or, if you are thinking of taking either an annuity or a drawdown at retirement, it is certainly advisable to search the whole market to find the best option. If you want to buy an annuity, perhaps another provider could give you a greater choice of options and – potentially – a higher income.

Other major considerations to take into account are whether your attitude to risk has changed or how much tax you will pay on your pension.

Our attitudes to risk vary at different stages of our life, depending on how close you are to retirement, how financially secure you are or how much growth you feel you might be able to achieve before you bring your career to a close.

What are the implications of tax on your pension fund? Reviewing your pension plan will allow you to plan for and mitigate against those implications, or there could even be great options you didn’t know about for managing tax in a way that suits you and your circumstances.

Pension Review Service

How Sage Wealth Management can help with different pension options

There’s an important question that we should all be asking ourselves, whether we’re in the midst of our careers or approaching the end of our working lives: how much could I retire on?

Unless you review your pensions regularly, it is unlikely that you will have an idea of how much income you could expect to receive from your pension funds when you retire. The state pension, as we’ve touched upon, is unlikely to be sufficient for the vast majority of people and give them the level of comfort they deserve in retirement.

When he founded Sage Wealth Management in 2008, our Director Michael Sage felt confident that he could provide clients with a better service and the best possible advice by setting up his own Practice. And so it has proved to be, with Sage continually working to the highest professional standards and building relationships with our clients based on trust and an in-depth understanding of their personal finances.

Our tailored approach to our clients’ financial needs and future aspirations puts us in a great position to be able to help them review and choose the best retirement planning options for them.

We work with a carefully considered panel of providers through St. James’s Place to provide a number of retirement options. Including:

  • Self-Invested Pension Plans (SIPPs)
  • Trustee Schemes
  • Retirement Plans
  • Drawdown Plans
  • Annuities
  • Leaving the balance of your pension to an individual upon your death (be aware that this may involve certain tax implications)

Please note that St James’s Place also manufactures some pensions options.

If you would like to discuss your pension options, please get in touch with us.

Email us at michael.sage@sjpp.co.uk or call 01665 667 078 to book an appointment – we’ll be more than happy to help.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances.