Start a pension if you haven’t already

It may sound like a simple thing to think about, but starting a pension as soon as possible has numerous benefits and paying in as much as you can reasonably afford could stand you in good stead for many years to come. Often people put off starting a pension with thoughts that retirement is a long way off and there are more immediate wants and needs.

Well the longer you leave it to start or increase your contributions the longer it will be until you can retire. Gone are the days where we join a company from school, college or university and stay there for life, with a pension paying out when we hit 60 or 65, so getting a head start with a pension will mean a significant difference to you in later life, even if you can only afford a small amount now. The sooner you start contributions the longer they have to grow, although they will be locked away until age 55 at the earliest, but it removes the temptation to use the money for something else. In addition, there is always a chance that the tax relief we see on pensions today could be removed in the future, so now is the time to take the benefit of the tax relief.

Claire Trott, head of pensions Technical, Talbot and Muir

Check for cash in the attic

If you’re past your 20s, chances are that you’ve changed jobs a few times and have collected some small pension pots along the way. In the excitement of changing jobs it’s easy to overlook your pension rights, but these can be valuable. They might start off as small sums, but they can build to a decent size. So if you have paperwork stuffed in the back of a drawer, or filed in a box in the attic, make a New Year’s resolution to dig it out and take a look.

You should be receiving statements from the pension company each year, so make sure you’ve got these. If not, call the pension company and ask why, and ask for an up-to-date statement. And ask about the charges you’re paying – you might be better off switching it to a cheaper plan.

If you need help, call The Pensions Advisory Service, an impartial DWP-funded service. But don’t fall foul of scammers – if you get a cold call or email offering you “fantastic” investments, don’t fall for it. You’ve worked hard for your pensions – don’t let them gather dust in the attic: make them work hard for you!

Chris Jones, principal, Rock Consultancy

Review your investments

Reviewing the various funds that your pensions are invested in is a good idea. Each fund will have its own risk and reward characteristics and it is important that they match your own personal attitudes towards risk. Online tools are available to provide this information. A consultation with a regulated financial adviser may also be beneficial to make sure your pension funds are working hard for you.

Martin Tilley, director of technical services, Dentons Pension Management

Understand your goals

With the state pension age increasing and the amount of income that it pays not being enough to provide the majority of us with a reasonable standard of living in retirement, we have to all take responsibility to provide for our own retirement. There are two simple questions that should help with this:

1. Do you know when you can afford to retire?
2. Are your long term savings working hard enough?

It doesn’t matter if you are 30, 40, 50 or older, we should know the answers to these questions. It’s important to understand our future financial position and what actions can be taken to improve the situation.

If you can’t answer both questions then your New Year’s resolution should be to find the answers. Some online tools and information may be sufficient to provide the answers but you may also need to talk to a specialist to help you answer the questions and understand what, if anything, you can do about it!

Andrew Pennie, head of pathways, Intelligent Pensions

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