No matter how young – or how old – you are, it is never too early or too late to review your pension arrangements. Many people assume that the State Pension scheme will look after them, but may be mistaken.
The maximum amount you can currently get under the State Pension scheme is £115.95 per week – the equivalent cost of a posh folding travel bag in Harrods – and this is taxable.
Nutmeg has a nifty pension calculator that enables you to get a quick estimate of how much you may typically receive when you retire. You may be shocked by the results!
Throw in to the equation the new pensions freedoms, which enables people aged 55 and over to access their private pension pot, and it can be difficult knowing what is the most appropriate way to secure your financial future.
If you feel it is unlikely you’ll have a comfortable retirement with only the State Pension to rely on, even when topped up by any personal pension schemes you have, then what can you do?
There are a number of ways that you can enhance your pension pot, no matter how – or few – working years you have left.
If you aren’t contributing to a personal pension scheme, then now may be the time to do so. If you’re a basic rate taxpayer, you can get an instant 25% government top-up on any regular personal net contributions you make. In monetary terms, if you invest £80 a month in a pension scheme, the Government will top this up with a further £20. It’s easy money!
Check your fees
A recent article in The Telegraph highlighted how some personal pension scheme management fees were swallowing up a large amount of the profits from the investment. If you are in an existing scheme, do you know how much you are being charged?
If the figures are high, you may wish to consider transferring your pensions. This can be done fairly easily.
Whether your planned retirement date is 5 years or 40 years off, it makes sense to make sure you have the most appropriate pension arrangements in place:
- One that will help provide towards a comfortable financial future; and
- One that doesn’t charge a lot in management fees (meaning you get more of the profits).
Enjoy your retirement
Retirement is meant to be the time of your life when you kick back and reap the rewards of having worked hard for many years. It may be that you want to take up a new hobby, travel the world, or spend more time with friends and family. Or you may simply want to potter. Maybe it is so far on the horizon you cannot even contemplate what you will be doing but know you want it to be a financially comfortable retirement.
Whatever you want to do, having money behind you in the form of a pension pot will help you make the most of your golden years.