Many of us have felt the financial strain of 2020 and going into the new year provides fresh opportunities to reassess our finances and maybe implement some overdue changes. Many start saving as their new year’s resolution of choice. While we might not review our pensions day-to-day, planning to put money aside and monitoring your plan is fundamental. What better time than the new year to straighten out your retirement plans?
From understanding ways to best vet a financial advisor to tracking down old workplace pensions, explore various tips for how to improve pensions during 2021 in our guide below!
1. Track down a lost pension
Traditionally, worker loyalty was higher to employers over the years and they wouldn’t have to worry about maintaining an extensive pension portfolio as they would have fewer plans with fewer businesses. Fast forward to modern times, and you find employees working for several companies within a single decade. This can leave preparing for retirement quite a complicated process if you have misplaced pensions and need to track them down. If you might have changed address and so no longer receive annual pension plan statements, either contact your previous employers or consider contacting the free Pension Tracing Service.
2. Consider increasing your contributions
Online pension calculators will demonstrate the importance of contributing to your pension early and upping your contribution rates when you have more financial freedom. Remember, after increasing your contributions, you can always reduce them if money gets tight. If you find yourself in a position to prepare for your retirement early on, you might not find yourself be concerned about your retirement income later, or you will be more prepared for moments when you can’t contribute at all. Consider committing to 12 months of increased contributions and see how you get on.
3. Review your will
Just like many assets, pensions can be passed onto a beneficiary when you pass away. The payments they get does depend on the type of pension you have and various factors like age and health. Regardless, if you are approaching retirement, it is best to review your will and ensure that your pension, along with your other assets, is going to the right people. Revisit your will and decide whom to grant power of attorney if you haven’t already done so.
4. Check potential claims
Vigilant pension planning doesn’t just concern the money you contribute; it also means taking time to rectify issues if you have been given bad advice or been scammed. If you have been told to move your pension into a Self-Invested Personal Pension (SIPP), you may have been mis-sold an investment. Mis-sold SIPPs are frighteningly common, but you may be able to get your money back. If you believe you have fallen victim, reach out to our mis-sold pension claims specialists to have experts look at things for you.
5. Vet the right financial advisor
You might be choosing your first pension, or you may be switching from one to another. Either way, having a financial adviser assist you in picking the right pension product can be particularly useful. However, as with many businesses, sometimes personal bias can come into play, leaving you with a product that isn’t suited to you, but which financially benefits the advisor. Look at the experience the advisor has, the type of clients they usually work with, and whether they are registered with the FCA. It’s also important to consider the fees that they charge and whether you can afford them.
6. Get a second opinion
When exploring pension options, advisors can be very impertinent with their encouragement, leaving you pressured to go ahead with whatever they are positioning. However, like any other sale, it is always best to shop around. Get a second (or even a third) opinion before you commit to anything. This is a great way to avoid issues with mis-selling which you may be able to claim for later, but obviously something you would want to avoid.
7. Monitor pension performance
A trivial but essential tip to note is that you should monitor your pension performance. Too many a time, people looking to retire check their pension summary and find a more than undesirable sum at the bottom of their entitlement statement. Add a reminder to your calendar to monitor your pension performance once or twice a year to ensure that things are on track.
8. Start sooner rather than later
Our UK Pension Age Timeline highlights how the years we spend in retirement are shrinking. It is easy to see that pension importance is decreasing as we won’t need the money saved for as long. However, it is easy to put your retirement planning on the back burner. If you are in your 20s or 30s and believe that you don’t need to worry about your pension, don’t make the mistake that many make. Don’t disregard your planning and start your pension early!
9. Be wary of scams in 2021
As coronavirus still has a heavy influence on our lives in 2021, it is crucial to recognise that the people taking advantage of the situation are still hard at work. Covid-19 scams like HMRC branding fraud and pension liberation fraud have targeted businesses and workers excessively last year, leaving many financially crippled. So, be wary of them in 2021, and understand what signs to look out for with newer scams – find out how scammers target victims with Covid-19 in our guide.
10. Talk about money
Around the world, money talk can be a huge taboo. Putting off awkward conversations about financials isn’t uncommon, but it is common that lack of communication can cause problems. Ways on how to improve your pension do include being aware of the whole picture, which is sometimes best found through conversation. Maybe an older family member is being targeted by scammers and needs assistance, or your partner is concealing details about joint finances. Talking about money is crucial for pension planning and is an essential tip to preserve in 2021. Find the right time, the right place, and discuss your finances with your close ones this year.
If you have concerns about a pension scam and you would rather pick up the phone to us, don’t hesitate to contact us on 0161 968 0768. Why not find out how you could benefit as our clients have in their testimonials!