Over the last 20 years, pension products have developed greatly and one change is that much lower charges exist with modern day pensions.
If you have an older style pension, you will find that many have annual management charges (AMC) above 1% per annum, have bid / offer spreads for ongoing contributions (typically a 5% charge for each new contribution being invested) and ongoing monthly policy fees, although those with guarantees built in should not be given up lightly.
Charges have a direct impact on the returns and final benefits you will receive from your pension’s fund.
Has your attitude to risk changed?
The amount of risk we are willing to take varies at different stages of our life, depending on how long it is until you retire, how financially secure you are, or how much growth may still be required to achieve your objectives.
You should undertake an assessment of your appetite to risk on a regular basis, normally at least every two years. Your investment funds should then be aligned to match your appetite to risk.
How much could you 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 or the state pension when you retire.
The provision delivered by the state pension is unlikely to be sufficient for the vast majority to live a comfortable retirement.
The longer you prepare and the more regularly you review, the greater your chance of achieving a better pension in retirement.
Regular reviews will also highlight any funds that are not performing well. Poor performing funds can contribute to much lower levels of pension income in retirement.
Are you getting ongoing advice?
Sadly, only a small number of individuals who have pension benefits have reviewed their pension plans on a regular basis.
Many individuals hold a number of different pension plans and have no understanding of how their pension plans work, the charges, risks or benefits they could expect to receive.
Generally, most pension plan holders do not know what or how their income will be generated in retirement.
Ongoing advice is crucial to delivering the best outcomes at retirement – without a plan and the monitoring of that plan, your chances of a happy retirement could be limited.
If you, or anyone you know, would benefit from undertaking a review and receiving regular advice, then please contact one of our team to arrange an appointment.