Pensions Advice – Existing pension plans

Existing pension plans

So where should you start? The first task is to establish exactly what you’ve got and the returns they are generating.

This will probably require delving into your files to find policy documents and requesting information from providers and administrators of old occupational pension schemes.

Anyone belonging to their employer’s scheme should have received information about it when they joined. Those with stakeholder or personal pensions will have a key features document and receive annual statements estimating the pension’s future value. If you are employed and a member of an occupational pension scheme, it may be worth finding out if your employer can give you a combined pension forecast that shows details of your state pension and company pension together.

If you are already a member of a personal pension scheme, your pension provider will send you a statement every year that includes an individual pension forecast for the scheme you belong to.

If you think you are a member of one or more old company or personal pension schemes that you do not know the full details of, the Pension Tracing Service may be able to help you. You can also ask for a state pension forecast which will give you an idea of how much you can expect to receive.

Scrutinise your investments

When you have all the information about the pensions you already have, it’s time to examine how well these arrangements are working for you. Have the investment funds chosen delivered the returns you expected? And are you on track for a comfortable retirement?

Money purchase pensions and personal schemes allow you to invest in a variety of investment funds, such as unit trusts and investment trusts. Getting the balance of investments right is crucial and will depend on your attitude to risk and how close you are to retirement. It’s also important to consider the impact of charges. In fact, the best way to improve returns is to have better control over the fees being levied on your pension investments to ensure your money is working hard for you. Even an extra 1% or 2% return per annum can make a huge difference to the final value of your pension fund. For example, a pot of £50,000 earning an annual rate of 5% would be worth £103,946 after 15 years. However, it would be worth £119,828 if it had earned 6% and £137,952 for 7%. Keeping annual costs and fees down can boost long term returns.

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