Do you know how much your pension is worth? Do you know how many you have or where they are? How about the type of funds they’re invested in or how much risk is involved?
I f the answer to any of these questions is ‘no’, you need to take stock and plan to review your pension at least once a year and every time your personal circumstances change. Make sure your pension is on track to grow enough to support you in retirement.
Almost three quarters of under 45s with pensions have no idea what their pension pots are currently worth. And nearly 80% say they don’t know what income they are expecting when they retire.
Run-up to retirement
The YouGov research shows that many people don’t really know the value of their pension until they are older and in the run-up to retirement, despite the fact that they’re likely to be receiving annual pension statements.
Alongside your home, your retirement savings are likely to be one of your biggest assets. So by not keeping track of the value of your pension pots and how they are performing, you may be missing out on opportunities to take action and really are leaving yourself vulnerable at a later age.
Multiple pension pots
Keeping track of pension values is not helped by having more than one pension plan, perhaps built up over time as you move jobs. The research highlighted that 43% of people in the UK with pensions have two plans or more. Having multiple pension pots may make it more difficult for some people to get a clear picture of their total value. It could also be a reason for losing touch with a pension provider.
Managing retirement savings
Consolidating your pensions into a single pot could help and, if appropriate, may be something to consider. By the time you have been working for a number of years, you may have accumulated a number of different pensions from previous employers, and it can be hard to keep track of these pots. Having all these separate pension pots may not be the most efficient way of managing your retirement savings. Pension consolidation involves bringing all of your separate pension plans together and combining them into one single pension pot, although care is required.
Professional financial advice
But before moving your existing pensions, you should always obtain professional financial advice to make sure you are not giving up important benefits, such as defined benefits, ‘with profits’ bonuses, guaranteed annuity rates or enhanced tax-free cash.
Pension consolidation means that you would have only one provider to keep in touch with and one annual statement to look at and review. Potentially it can also mean paying lower charges and possibly having greater choice and buying power when you come to retire too. If you eventually purchase an annuity, you may also be able to obtain a better rate if your money is all in one pension pot.
All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,018 adults, of which 1,361 have a pension. Fieldwork was undertaken between 9–12 August 2013. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).
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.
PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERORMANCE.
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.