Have you got a pension? If the answer is no, then you should be looking at your plans for retirement. Equally if you have a pension, then you need to make sure that it is going to provide for you in later life.
As you will have heard, many pension schemes in large companies have had to close. The pensions that have been hitting the headlines are final salary schemes in big corporations, many of which are suffering a huge deficit.
It has been estimated that companies in the FTSE100 alone have a massive £96 billion shortfall between them. This has resulted in a number of big employers closing schemes to new staff and some have even closed to existing members.
Public sector pensions are not safe either, with an expected shortfall of £4 billion. Personal pensions are not doing too well either, as falls in the stock market mean that many funds are worth a quarter less than then two years ago.
It is now thought that half of people aged between 20 and 60 are not paying anything into a pension, either because their pension schemes have closed or because they don’t actually have one.
Economic downturn is obviously at the front of this debate, but people are being urged to not stop their contributions. In fact it is time to take stock and try and make up any shortfall or at least review your retirement plans.
Want to safe guard your retirement? Here are some helpful tips and pieces of advice.
What to do if you don’t have a Pension
A pension sounds expensive and it might not actually be the right option for you. If you only have a few years left until retirement, you might not have enough time to build up the funds that you need.
Firstly you should check to see what you are entitled to from your state pension by asking for a ‘Pension Forecast’ from www.thepensionservice.gov.uk. Then if you have a shortfall you can talk about the best way to make up missing amounts.
If you are offered the chance to join a company employer’s scheme, then you definitely look at doing this. This is especially beneficial if you employer makes a contribution too.
Some pensions allow you to stop and re-start contributions, so don’t let that monthly direct debit put you off.
The most important thing to remember is not to delay. You should consider your future; even if you are young and think that this doesn’t affect you. Eventually it will.
Have you got a Personal Pension?
Firstly ask for a valuation and compare this to your expectations. If there is a shortfall, which there is likely to be, then talk to your pension provider or IFA about how much more you would need to contribute to bridge the gap.
Got a Final Salary Pension?
With any luck your final salary scheme is not in deficit, but chances are that it is. Speak to your scheme trustees and find out what their plans are to safe guard your scheme.
You should consider whether the scheme is going to continue to be affordable and whether it would be better to top-up your pension or make additional savings.
Relying on you Public Sector Pension?
If you are relying on a public sector pension to keep you going through retirement, then you might want to reconsider. Public Sector Pensions are under fire and so you might want to consider a 2nd pension or topping yours up.
Got a different type of Employer Pension?
Are you a member of a defined contribution scheme? Or perhaps you have a stakeholder scheme or a different type of pension that your employer contributes to? Either way the value is likely to have been affected as the stock market took a dive.
Your best bet is to ask for a valuation of your scheme, so that you know how much, at this stage, you are likely to receive. Then again seek advice on the best way to boost your retirement fund.
Have you got several pensions?
These days you are less likely to stick in one job for life. With this in mind you might have several pensions that have been left with previous employers and have been forgotten about.
Make sure that you track down any pensions that you might have floating around. Think about taking all of your existing pensions and putting them into one manageable plan. This could be a low cost stake holder pension.
It is also worth considering that some pensions might be better off where they are, so make sure that you do your research and seek financial advice.
Whatever type of pension, you should be weighing up your options and considering what the best course of action is for your retirement.