Pensions - What Should I Do ?

Martin Bamford asked:


It is generally accepted that we have a retirement planning crisis in the UK. The recent stock market volatility is causing more pension problems, with £19bn wiped off the value of the top 200 defined benefit pension schemes in the first half of March alone. Around 25 million of us have defined contribution pension plans - either with their employer or as a private pension plan. The value of these plans are often closely linked to stock market performance.

Here are five questions to help you work out if your finances are in good shape or battered by the credit crunch.

Do you have a pension?

If your answer is yes, move on to Question 2. If no, the seriousness of your position depends on your age and whether you have any other savings that you could use in retirement. Readers under the age of 40 still have plenty of time to build up a reasonable pension fund. But if you are older, you need to start setting substantial amounts aside now.

What type of pension plan do you have?

Employees who have the option of joining a company pension scheme to which the employer makes contributions should grasp the opportunity with both hands. For those who don’t, a cheap stakeholder plan from Friends Provident or Clerical Medical is a good starter plan. If you want to make big contributions and have tight control over the investment of your money, you could consider a self-invested personal pension (Sipp) such as the one sold by Standard Life.

When did you last check the performance of your pension?

You need to keep an eye on where your money is invested and how it is performing to make up any shortfalls as and when they develop.

What are its charges?

Since April 2001, charges on some personal pension plans have been lowered but other plans still suffer from high charges that will eat away at the value of retirement benefits.

How much do you contribute?

Most people like to think they will retire on an income equivalent to two-thirds of their final salary, but few end up with that. Check how much you need to save according to your age, salary and expected retirement age at pensioncalculator.org.uk.



Enrik

Jenwa asked:


Are you over 50?

Do you have a pension?

If you have answered ‘yes’ to the questions above then you could release a tax free sum from your pension now.

Pension release is simply unlocking your pension now, instead of waiting until your pension has matured and you have retired and started receiving form your pension.

Cashing in your pension now releases a tax free amount so that you can start benefiting from your pension before you retire, which could be for an investment, needed income or paying off a debt.

This service applies largely to those in the UK and does mean that the amount that you gross once you actually retire will be considerably less than if you leave your pension to mature. Pension release is also only suitable for specific people in particular circumstances.

The term pension release or pension unlocking means removing money from your pension now but you cannot already be receiving money from your pension or contributing to and you must be over 50.

There are various options available, but you should always talk to a professional about what you specifically should do.

Most companies will ask you to complete two forms, one of which will allow them to get in touch with your pension company to discuss the cashing in of your pension.

Once they have gathered all of the relevant information regarding your pension, there will be a better overview of your pension and what can be done with it. Then the pension release company should assign a specialist consultant who will help you with every aspect of your pension release.

The specialist consultant will consider every aspect and help you to establish whether you should in fact release money from your pension now, or whether it is best to wait until your retirement. You do not want to be in a situation where you don’t have any money to live off once you have retired.

Pension release is an option that many are considering as they stare down at the credit crunch and bills to pay, where everything is going up. If you are considering releasing money from your pension now, then seek professional advise.

 



Abigail