A good time to check in with your pension

Pensions can be easy to put to one side. Retirement might feel a long way off, contributions are often made automatically and, with plenty of other demands on our finances, reviewing a pension does not always make it to the top of the to-do list.

Pension Awareness Week is a useful reminder to give your retirement plans some attention.

Taking the time to understand what you have, how your retirement savings are progressing and whether they are still aligned with the future you want can make a real difference over the longer term.

So, when did you last properly check in with your pension?

Start with what you have

It is common to build up several pension pots over the course of your career, particularly if you have worked for a number of different employers.

You may have pensions with different providers, invested in different ways and with different charges, features and benefits.

A good place to start is simply to establish what you have and where it is held. This gives you a clearer picture of the retirement savings you have built up so far and can help identify any older pensions you may have lost track of. 

Are you saving enough?

Knowing how much you have in your pensions today is important, but the bigger question is whether those savings are likely to support the retirement you want.

It helps to think about what retirement might actually look like for you.

When would you like to stop working? Would you prefer to retire completely or gradually reduce your hours? Perhaps you would like to travel more, spend time with family, pursue hobbies or provide financial support to children or grandchildren.

Having an idea of the lifestyle you want gives you something more meaningful to plan towards. You can then look at your current pension contributions and wider savings and consider whether you are heading in the right direction.

It is also worth reviewing your contributions when your circumstances change. A pay rise, new job or change in your regular outgoings can all be good opportunities to look again at how much you are putting aside for retirement.

Look at how your pension is invested

Your pension may be invested for many years, so it is worth understanding where your money is held and whether those investments remain suitable for you.

The investments selected when a pension was first set up may not always be appropriate throughout your working life. Your circumstances can change, as can your plans for retirement and your attitude towards investment risk.

The closer you get to retirement, the way you intend to use your pension becomes increasingly important too. Someone planning to take a regular income may have different requirements from someone who does not expect to access their pension for several more years.

The value of investments can fall as well as rise and you may not get back the amount originally invested, so it is important to consider whether your pension investments remain suitable for your circumstances and plans.

Regular reviews can help make sure your investment approach continues to reflect your circumstances and plans.

Think about how you might take an income

There are now a number of ways people can access their pensions in retirement. Depending on your circumstances, you may also have ISAs, investments, cash savings, property or other assets available to support your income.

How and when you use these different assets can affect how long your money lasts and how much tax you pay.

This is why retirement income planning is worth considering before you reach the point of needing to draw from your pension.

Looking at your finances as a whole can help you understand where your retirement income could come from and how your different savings and investments might work together.

Keep your beneficiaries up to date

A pension review is also a good opportunity to check who you have nominated to receive your pension benefits when you die.

It is particularly important to revisit these details after a significant change in your personal circumstances, such as getting married or divorced, having children or grandchildren, or experiencing a bereavement.

Pensions can also play a part in wider estate planning, although the rules and tax treatment can change. It is important to consider your pension alongside your other assets and your plans for passing wealth to your family.

Make pension reviews a regular habit

Your retirement plans are unlikely to stay exactly the same throughout your working life.

Your income can change, your family circumstances can change and your priorities for retirement may look very different at 55 from how they looked at 35.

Pension rules and tax legislation can change too.

Checking your pension regularly gives you the chance to see where you stand and make changes where necessary. You do not need to have every detail of your retirement mapped out, but knowing what you have and what you are working towards is a good place to start.

When did you last review your pension?

If it has been a while since you looked at your retirement plans, Pension Awareness Week is a timely reminder to do so.

Whether you want to review old pension pots, look at your contributions, understand how your pension is invested or start thinking about how you will eventually take an income, we can help.

Speak to your adviser if you would like to review your pension and discuss whether your current plans remain on track for the retirement you want.