Keep your pension on the right track

After a rollercoaster year, many of us are understandably worried that our pensions may not have weathered the storm. Pension expert Emma Watson advises us on how we can ensure finances are still up to scratch

Assess your pension plan

“Deciding whether you need to rethink your pension strategy will depend on your individual situation,” explains Emma Watson, Head of Financial Planning at Rathbone Investment Management. “The past year has certainly impacted many people’s finances – some for better and some for worse. As we start to recover from the pandemic, now is a good time to reassess your savings plan.

Start by asking yourself:

■ When do I plan to retire

(if you haven’t already)?

■ How much do I need to live comfortably per year?

■ How much will I have when I hit retirement?

■ Do my current contributions still work for my situation?

Based on these questions consider whether you will be able to meet your goals with your current pension strategy. If the answer is no, it’s time to reassess.”

Check you’re still getting a good deal

“Pension changes can be hard to navigate, particularly with older policies,” warns Emma. “Ask your provider about the charges for both the pension and underlying investments that sit inside it. This will tell you how much you’re paying in fees and will help you measure your pension against other options. There may be savings to be made if you shop around.”

If you’re unsure try Pension Wise (pensionwise.gov. uk), which offers free and impartial advice. Alternatively, seek advice from a financial adviser, but check they’re listed on the Financial Services Register (register.fca. org.uk) and are authorised by the Financial Conduct Authority (FCA).

Evaluate your pension contributions

“We advise you look at your pension contributions each year and particularly if your income increases, as this means more disposable cash to put away for the future,” explains Emma. “If you’re still working, some employers will match any contributions you make, so check this too. Finally, if you can afford to save and invest more now, it can bring bigger rewards for the future.”

Future-proof finances

“It’s possible to pass your pension onto loved ones, so remember to nominate beneficiaries as part of your planning,” says Emma. “Your employer or pension provider will usually have what’s called a ‘Nomination of Beneficiary’ form which can be used for this purpose. This means that if there are savings left over when you have passed, your family can benefit. Inheritance from a pension lump sum is usually exempt from inheritance tax, which makes it a very tax-efficient way to pass on money.”

Ask for help

This past year has left many of us feeling uncertain about what the future may hold and it’s important not to leave your pension to chance.

“If you’re unsure about whether you’ll have enough in retirement, whether your pension investments suit your situation or are just unsure about your options, seek professional advice,” advises Emma. “Your pension might be the single most important investment you’ll ever have, so it needs to be working well for you.”