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Top 5 tips for improving your pension

Wednesday, December 22nd, 2010

Most people can improve their pension by taking a few simple steps and seeking some independent financial advice. Here are five tips that could help you to improve your retirement income.

1/ Top up your National Insurance contributions and “buy back” missing years for your state pension
If you do not qualify for the basic state pension, you can buy up to six years additional voluntary National Insurance contributions.

With approximately 65% of women in the UK failing to qualify for the full state pension this is good news. It is not free….each year of contributions costs c£400 and the full six years will cost £2400 but this could result in an extra c£960 per year payable for life.

2/ Find out if you qualify for pension credit
Pension credit guarantees a minimum weekly payment of £130.60 per week for a single person and £202.40 for a couple. These amounts may be more if you are disabled, have caring responsibilities or housing expenses such as mortgage repayments.

If you have made provision for your retirement by saving into a pension plan you may qualify for Savings Credit after the age of 65 and this will increase your retirement income by approximately £20.00 per week for a single person.

You can find out more from the directgov website or by phoning the pension service on 0800 99 1234.

3/ Find lost pension plans
Every little bit makes a difference and even if you only paid in for a short period of time, there is money lying dormant somewhere with your name on it!

You may have paid into a pension plan years ago, perhaps when you first started work for example, and have since forgotten about it. Even a few years contributions will make a difference so if you cannot remember the details, contact the pension tracing service to track this down.

Whether you contributed to a company pension scheme or have lost track of a private pension plan, start tracing your pension now to claim your lost contributions.

4/ Save more now
If you are approaching retirement age, why not put money into a pension plan rather than into a savings account? The tax relief on pension saving and the low interest rates on savings accounts, makes the pension plan a better saving option at the moment.

5/ Transfer your pension
Many people do not realise that they can change pension providers and transfer existing pensions to new funds.

For those who have changed jobs and had a number of occupational pensions throughout their working life, consolidating all these small funds into one better performing plan could be a good idea.

Even if you only have one pension fund, you might find that this could do better for you if moved elsewhere. Contact an independent financial adviser to find out if transferring your existing pension could improve your retirement income.

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Control your income in retirement

Tuesday, December 21st, 2010

Keeping control over your income is something that you have done throughout your working life. You have probably been through some hard times and bought up your family when money was tight. You have had to make your choices and have probably gone through bad times as well as good.

Take a bow! You should be proud of yourself. You have had many years of working hard and now you have reached retirement age you have the time to do some of the things that you have always wanted.

Whether it is going on a cruise, taking up a new hobby, travelling or simply spending more time with your family, retirement is an opportunity to enjoy yourself. And with people living longer and staying younger, this can be a great time for you.
It has always been up to you to decide how to deal with your own money, so now that you have reached retirement age, why should this be different?

Many people do not realise that they have control over their own retirement income. They simply sign their pension fund over to their pension plan provider after years of paying into the fund. This can be a costly mistake.

When you take out an annuity pension, you hand over the control of your income to an annuity provider. Once you have sold your pension fund to the annuity provider, you have to accept what they give you in return. Worryingly, this contract cannot be changed later.

The rate of income that you will receive will be fixed at the time you start the annuity so if like today, it provides a low rate of interest, your income will not be as high as it could be. Moreover, even if interest rates rise in the future your income will not reflect this improvement.

Today, many people are beginning to realise that there is a range of difference between the rates and terms offered by annuity providers, so are beginning to shop around for the company that provides the best returns and best service.
This is a step in the right direction but there are better alternatives to funding your retirement than by choosing an annuity pension however good it may look.

There are other pension options available that give you the freedom to keep control over your own money yet provide a safe income without locking you into to a long-term contract. In addition, these still leave you the option of buying an annuity at a later date should you want to.

Why not contact an independent financial advisor to find out more about the best way to fund a long and financially secure retirement that leaves you in control of your income.

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When should you start saving for a pension?

Monday, December 13th, 2010

When should you start saving for a pension? The easy answer to this question is as soon as possible!

Many people feel that the retirement income that they would like, is roughly 2/3 of their salary at retirement age. To achieve this, the earlier that you start saving for your pension the more painless it will be.

Although, it is never too late to start saving for your retirement, early pension saving habits will pay dividends in the long run. For people lucky enough to start work with a company that has a company pension plan, saving for a pension becomes part of life, like national insurance contributions and paying taxes.

When you are young, you do not really think about it – it is just another deduction from the wage packet and if you did not save the money for your pension, you would probably just blow it anyway!

As we get nearer to retirement age, the pension becomes more of a looming reality. If you are self-employed or work for a company without an organised or adequate pension scheme, it makes sense to set up a pension plan of your own. You will get tax advantages from your pension saving so take some independant financial advice and find out how you can maximise your pension saving, and catch up if you have missing years.

In general, some living costs can decrease as we get to retirement age. Usually the mortgage has been paid off, children long left home and any major purchases or home improvements have already been made or done.

Reaching retirement age can be a period of life that is very happy and fulfilled as you reap the benefits of all your hard work and get to enjoy increased leisure time and opportunities. Being able to afford to travel, go on holiday and live in comfort is preferable than sitting at home watching daytime TV and worrying about bills in your old age. Sadly, this is the future for many people who have not saved for their retirement.

If you feel that you have left your pension saving too late, do not despair.

If you delay starting a pension then it will take more effort and expense to get to a reasonable level of pension but it can be done. The general advice is, to start saving once you start earning, but if you have not done this yet then act quickly.

Take some professional independent financial advice and find out the best way to fund your retirement.

Sooner is better – when it comes to pensions, but better late than never also applies.

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