With January almost done, the new tax year is just over two months away – making this the ideal time to start looking at your financial arrangements, and in particular your pension.
There are some important checks you need to make before 6th April, and now is the time to start.
Check 1: Track down your pensions
If you’ve changed jobs a few times, and joined the pension schemes with each employer, or you’ve moved to a new house, you may have lost touch with some of your pension savings. It is more common than you might think.
For savings in a workplace scheme, the Department for Work and Pensions has a Pension Tracing Service which has a register of all workplace schemes.
For personal pension savings you can contact the Pensions Advisory Service which will help guide you through what to do to find a lost pension.
Check 2: Watch your Pension investment
Your pension is too important to leave to chance. You need to check where your funds are invested and that they meet your performance objectives and attitudes to risk.
Stock markets have risen sharply during the last year. A small proportion held in high risk growth funds may have performed well – meaning that you should consider re-balancing by switching your funds to transfer the growth into low risk holdings.
It’s always a good idea to get professional advice about your pension investments.
Check 3: Get some projections
You need to be certain that your pension funds are still on track to provide you with the level of income you want in retirement. There are several online projection tools you can use, and you can get a projection of your state benefit entitlement via the Money Advice Service.
If the results look disappointing, don’t despair. You may need to increase your contributions to deal with any shortfall. Remember, taking action to top up contributions now could make more of a difference to the income and the lifestyle you enjoy in retirement than if you leave it for a few more years.
Check 4: Assess your contribution levels
The tax benefits of a pension are so exciting that for most people it makes sense to put in as much as possible.
However, although the government want to encourage pension saving, they set limits on how much you can save. The annual allowance is a limit on the amount that can be contributed to your pension each year, while still receiving tax relief. It’s based on your earnings for the year and is capped at £40,000.
There is also a tapered annual allowance which will restrict what you can contribute if your income will exceed £110,000. Exceeding your limit will mean penalties, and the exact position can be complicated. If you’re likely to be near or over your limit, assess your likely total income now 2018, and if you are in any doubt, seek advice.
Check 5: Update your form of nomination
You probably filled in your Form of Nomination or ‘Expression of Wish’ form when you took out your pension. It’s a simple form that instructs the pension provider where you want any benefits to be paid in the event of your death. If your circumstances have changed ask your pension provider for new forms and update them.
Get some help
Your pension is too important to be left to chance, so it’s best to get the help of an expert. For the help you need to ensure your pension can deliver the retirement you want, call us now on 0345 643 0770, or email us now at [email protected]
The value of pensions and investments can fall as well as rise. You may get back less than you invested.