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BLOG: The importance of talking about your pension

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Written by: Pete Hykin
12/11/2021
Despite research showing people who discuss money make better financial decisions and feel less stressed, nine in 10 UK adults still find it hard to talk about money.

This needs to change.

Talking to others about your personal finances, particularly pensions, is the first step towards improving them. Open conversations can help demystify the complex language often used in the pension industry, giving the clarity needed for confident financial decision-making.

Overcoming the awkward ‘money chat’ with friends and family

The stigma around talking about money can make communicating with loved ones seem daunting and awkward. But having regular and open conversations with friends and family is important to get a better understanding of your overall household finances and how your pension fits into this. Comparing how much you’ve already saved or how much you’re contributing to your pension each month against what others are doing can provide a better grounding of whether you’re on the right track, or if you need to make some adjustments to what you’re putting away.

Your friends may also be able to tell you about which pension provider they’re using, how their pensions are invested and how funds are performing, allowing you to make more educated decisions about your own pot so you can get the most out of your pension.

Understanding your workplace pension

While auto-enrolment has been a fantastic initiative to get people saving for retirement, employers often do little in the way of talking to staff about their pension pot and educating them on what they can do to save for retirement. The onus should be on the pension provider to offer the employer the right resources and support to educate their teams on their pension and how to make the most of it.

Without this open dialogue, employees are often unaware of the tools available to them such as retirement planners and contributions calculators to help you engage with your savings.

And having these conversations with employers is not only important for your financial wellbeing, but it allows you to ask questions about how your money is being invested. It’s employers who decide which pension scheme, and therefore which funds, their employees’ money is invested in. So, by discussing pensions at work, you can gain a better understanding of whether these funds align with your own values, and if not, ask for change.

Ask the experts

Whilst talking to the people around you is great, it’s also important to get expert advice from independent advisers who can help you understand your pension plan and how it can work alongside your other assets for a comfortable retirement.

Advisers can aid in building your retirement fund, educate on investment risk and advise on pension transfers. They can also help you in setting financial life goals as well as provide information on how to make full use of tax-free pension and saving allowances.

There are various networks and schemes available, such as the Money and Pensions Service, which offers free and impartial pensions guidance with the aim of ensuring every person feels more in control of their finances.

Starting this dialogue with people can not only help with easing any money worries you may have but incorporating these conversations into your everyday life is a simple step to feeling more in control of your finances and ensuring you can afford the retirement you deserve.

Pete Hykin is co-founder at Penfold

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