Six step to ensure you are not left in the dark over your pension - Sarah Coles
It’s how I spent so much of those get-togethers shame-facedly returning things that had been snaffled from other mums’ handbags.
I came to dread these ‘gifts’ so much that for a brief moment, before peering into an outstretched hand, I would wonder whether it would be better if I just didn’t look. So I have every sympathy for how millions of people feel about their pensions.
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Hide AdMany people are so worried about the state of their pension that they avoid looking more closely for years. It’s a major reason why our research shows fewer than four in ten people know how much their pensions are worth and only around a third are confident they’ll ever be able to afford to retire.
I’ll be honest with you, there might well be some bad news lurking in your pension statements but it is better to check it sooner rather than later.
If you or someone you know is in the dark over their pensions, there are some steps that will shed just enough light.
1. Find your pensions
We tend to build up pensions from different employers over time. Our research shows that more than half of us have more than one pension we’re aware of, while one in five have three or more, and one in 20 have no idea how many pensions they’ve opened and lost over the years.
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Hide AdIf you’ve lost track of any pensions, hunt through any paperwork or statements that might show where your money is. If you don’t have any records, you could contact old employers. And if that proves fruitless, you can try the government’s free Pension Tracing Service.
Once you know where your pensions are, request online access to your pots so it’s easier to see how much you have set aside.
2. Use an online pensions calculator
There are lots of these available, and they’re designed to let you plug in details of your savings and your planned retirement date, so you can see what your pensions are likely to be worth in retirement.
3. Consider whether you can contribute more
If you’re employed, there’s a good chance you’ve been automatically enrolled into your company pension scheme, but check whether your company will match any extra contributions you pay in. If the answer is yes, it’s worth putting aside any extra you can afford.
4. Check your investments
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Hide AdThere are three ways to boost your pension: pay more in, pay in for longer, or get better investment growth within the pension. The latter is the only way that doesn’t involve more effort from you.
5. Consider your retirement holistically
If higher contributions and your investment strategy can’t close the gap, you may need to rethink your plans. There are all sorts of options, from working longer and phasing retirement, to downsizing or moving to a more affordable location.
6. Get free help
There’s lots of information online about how pensions work, including from The Money Advice Service and the Pensions Advisory Service. If you’re 50 or over, you can get free impartial guidance from Pension Wise.
The good news is that when you take a look at your pension, there’s always a chance that things are much brighter than you expect.
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Hide AdSarah Coles is a personal finance analyst at Hargreaves Lansdown
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