10 ideas served up to help youmaximise your pension provision

It’s important to review your pension planning regularly to make sure it still meets your specific requirements. Over time, your circumstances may have changed, so we have provided ten areas that, if appropriate to your particular situation, should be reviewed.

1. Check your State Pension Age. The State Pension Age is changing. The Pensions Act 2014 provides for a regular review of the State Pension age, at least once every five years. The Government is not planning to revise the existing timetables for the equalisation of State Pension age to 65 or the rise in the State Pension age to 66 or 67. However, the timetable for the increase in the State Pension age from 67 to 68 could change as a result of a future review.

2. How much pension are you likely to receive from the State? An estimate of your likely State Pension can be obtained from the Pension Service. There are two parts to the State Pension – the basic State Pension, which almost everyone gets, and the additional State Pension, which is only for employees. You qualify for the basic State Pension by reaching State Pension age and making 30 years’ worth of National Insurance contributions.

3. Boost your National Insurance (NI) contributions. If you have an NI credit record of less than 30 years you may not receive a full State Pension unless you boost your NI credits. If you’ve got gaps in your NI contributions record, you may be able to top up the gap by making one-off voluntary payments. If you’re not working or getting NI credits, you may also be able to make regular payments to protect your contributions record for the future.

4. Consider retiring later. If you’re not sure you can afford to retire yet, think about delaying retirement. It could increase your State Pension or provide you with a one-off payment. The main reason for delaying your retirement is to try to boost your retirement income. And in order to take a pension early, you’ll need to know you’ll be able to afford a reduced income from it.

5. Decide whether to take a tax-free lump sum from your private pension. The rules for how you can access your private pension pots were made more flexible from 27 March 2014, and will be made even more flexible from April 2015. Commencing 6 April 2015, you’ll be able to access and use your pension pot in any way you wish after the age of 55. Until then, the rules about how much income you can access as a cash lump sum or through income withdrawal have been relaxed.

6. Decide how to use your pension fund to provide an income for life.  If you plan to retire from 6 April 2015, you won’t need to buy an annuity to access the remainder of your fund. Instead you could choose to take the whole fund as one or more lump sums. Generally, only 25% is tax-free and the rest will be taxable. For many people, this may still involve buying an annuity, but there are different types of annuity and other products to consider.

7. Select which options you want. If you do opt for an annuity, you need to decide what will happen on your death and whether to protect your income against inflation. Joint-life annuities after you die pay an income to your partner or spouse until they die. Variable or flexible annuities rise or fall in line with investments. However, they have a guaranteed minimum, so you have a degree of certainty, but they’re complex products and not right for everyone.

8. Consider consolidating your pension pots. If you’ve accumulated numerous workplace pensions over the years from different employers, it can be difficult to keep track of how they are performing. These plans can be forgotten and may end up festering in expensive, poorly performing funds, and the paperwork alone can be enough to put you off becoming more proactive. There may be advantages to switching your pensions but there are also pitfalls. You should always obtain professional financial advice.

9. Shop around for the best deal. As you approach your chosen retirement age, you may want to use some or all of your pension savings to purchase an annuity. You don’t have to accept the income offered by the company you’ve saved with. You could boost your pension considerably by shopping around. After deciding what level of income you need, you should shop around and compare rates. This is called using the ‘Open Market Option’. Shopping around can increase your retirement income significantly.

10. Catch up on missed pension contributions. If you haven’t fully utilised your previous years’ contribution allowance, you could use ‘carry forward’ from the previous three years and catch up on contributions you may have missed. The conditions are that in the same tax year you must have earned at least the amount you wish to contribute. In addition, you must have been a member of a UK-registered pension scheme in each of the tax years from which you wish to carry forward, even if you did not make contributions or were already taking benefits.

INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM, TAXATION ARE SUBJECT TO CHANGE.

A PENSION IS A LONG-TERM INVESTMENT. THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN. YOUR EVENTUAL INCOME MAY DEPEND UPON THE SIZE OF THE FUND AT RETIREMENT, FUTURE INTEREST RATES AND TAX LEGISLATION.