Find out how much is in your pension pot – and how much you should save now

January 1st is just around the corner and our consumer columnist Martyn James takes a look at the retirement checks you need to do now, regardless of your age. Here is his advice

It is worth getting your finances in order before the new year

Why are pensions so complicated? I’ve spent the last twenty years demystifying pensions for people, but I have to admit that the whole sector is still far too difficult to understand.

Unfortunately, many people still don’t even understand the basics of retirement.

Many of the readers I speak to have seen their retirement pot decrease due to commissions and fees charged by the annuity provider.

Others take out a pension with the same pension provider, although there are significantly better offers from other pension providers. And most of us don’t move our pension pots to other providers either.

The good news, however, is that there are plenty of new financial firms out there who can help you find a better annuity deal, even if you don’t have much in your pot.

And tracking down missing pensions from previous jobs is not that difficult. How to start.

The basics

Your pension will pay your bills when you retire … so it’s important to be in control of it


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First, let’s take a look at the three main types of pensions.

  1. The state pension This is the pension you will receive from the state (or government) and will be drawn from your Social Security contributions throughout your life.
  2. Your company pension scheme This is the pension you have from your job. You can usually pay extra into this and the pension provider should send you a statement every year – even after you leave the company.
  3. A private pension plan These are pensions that you set up yourself. They often come with tax breaks and are a really useful way to save for retirement – especially if you are self-employed.

How much money will I have when I retire?

First, retirement age isn’t set in stone – and if you’re under 50, you may have to wait even longer for your state pension.

The retirement age is currently 66 – 67 for those born on or after April 1960 and 68 for those born on or after April 1977 between 2044 and 2046. But that could change again if cash runs out in the future.

So it makes sense to have alternative plans for your retirement. This can be a scary business.

Many of the people I speak to completely deny their retirement income. A cold, close look at your current pension pots can cause a little panic. But let’s face it, it’s better to grapple with your finances than wait until it’s too late.

Don’t just rely on a pension, however. Savings and investments can help you meet your retirement needs.

It makes sense to speak to a financial advisor if you don’t know how to get started. They charge a fee, but it’s worth it to help you navigate the rather complex world of future saving.

Be sure to ask about costs and commission – and what you’re getting for your money.

How to Find Lost Annuities

The Pension Tracing Service is a completely free service that can help you track down a lack of company pension schemes.

This is important because many of us will keep switching jobs throughout our careers – and so it can be difficult to find old systems that you’ve paid into.

The Pension Research Service can help you by scouring 320,000 pension systems. It’s that simple, so get started right here.

It is estimated that close to £ 20 billion in “lost” pensions are lying around waiting to be drawn. However, there are companies that charge fees for this – don’t be fooled.

How much is my pension?

Both private and company pension schemes should send you an annual statement of the status of the pension.

These documents may not always make sense, but don’t toss them in the billing drawer and forget about them.

Ask the pension fund questions and let them explain things to you in plain English.

They take fees to manage your investments – so let them make their money.

Your HR department at work should be able to tell you what you can pay into your pension in addition to your additional contributions – and what tax implications this has.

Book an appointment with them, especially if you are over thirty and thinking long term.

The free Money Helper website offers a lot of useful information on the subject of old-age provision in a simple manner. I think it’s a fantastic place to start if you’re interested in learning more about retirement planning and saving.

You can book a free appointment for pension advice


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How Much Should I Save?

There’s a lot about how much you should be saving at each stage of life, but a pension professional can help you figure out the right amount for your budget.

An example is that after you retire, you aim for around two-thirds of your last salary each year.

To do this, you need to take the age you start contributing, take half of it, add a percent sign, and contribute that much each year for the rest of your life.

For example, if you start contributing at the age of 30, you will have to pay 15% per year for the rest of your career.

But the earlier you pay into your pension, the less you will have to cut your salary, of course.

Anyone looking for further pension advice can contact the federal pension advice center free of charge.

Pension Payouts – And Scams To Look For

A few years ago the government “liberalized” pension rules, which suddenly meant that you could withdraw most of your pension pot by the time you were 55 (expect that age will go up too). You can withdraw 25% of your pension tax-free if you want.

For the remaining 75%, you have several options:

  • You can withdraw some or all of it as cash – but the tax burden can be enormous.
  • You can buy an annuity – a regular payment that will give you lifelong income.

· There are other investment opportunities as well.

Rather unhelpful, a government minister posed for the new rules, suggesting that people go out and “buy a Lamborghini.”

It is really very important that you get regular financial advice when making your pension decision. Don’t go crazy and screw everything up.

Which brings me to scams. When people were suddenly able to raise large sums of money overnight, scammers got involved.

The advice here is really simple. Companies are prohibited from calling you coldly about pensions. If that happens, hang up – it’ll likely get questionable.

The scams work by forcing you to either transfer your pension to another fund (which charges commissions but doesn’t necessarily benefit you) or by investing in fake or nonsensical programs to get rich quick.

I can’t make this any clearer – don’t do it! Don’t even invest a pound in someone calling you cold.

If you need help with a retirement problem, Resolver can help you for free.

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