Do your pensions need overhauling?

Putting your hard-earned money away for retirement is all well and good, but if the money isn’t working hard for you in return, you could be missing out. We can help you overhaul your pensions to make sure you don’t lose out in the long run. This article shows you how. 

Find all your old pensions

Did you know that the Government now plans to give away the pensions you’ve forgotten about – all £20 billion of them* – to the National Lottery Community fund?

It’s easy to misplace or forget about a pension, but you could stand to lose your money if you don’t track them down. To get started, find your old pension paperwork or contact the provider(s) to figure out how much you already have as a starting point.

If you can’t find your paperwork or don’t know the name of the provider, it’s still easy to get your hands on the information. You can use the Government’s free pension tracing service by calling 0845 6002 537.

Add up how much you have in total and you could be pleasantly surprised! But don’t worry if you haven’t got as much as you want or if you think you can do better, there is plenty you can do. 

Check your fees

Are you paying too much in fees? Costs vary dramatically and older pensions in particular can have big fees to pay. These fees eat into your returns, especially over long periods of time, leaving less for your future.

If you have more than one pension provider, you’re paying multiple provider fees which again may eat away at your money. If you’re not sure whether you are paying too much, give us a call on 020 7189 9999 and we can help you decipher your statements.

How are your investments performing?

You can see how your investments are performing when you review your pensions. Poorly performing investments can have a massive effect on your returns over time. Take a look at our chart.

Why it pays to know what your pension is invested in

 

Over 30 years you can see the first pension growing to £86,439 – that’s nearly £60,000 more than the second.

Choosing the right investments is essential to help grow your pension as much as possible before you reach retirement. The good news is that it’s actually much easier than many people think to choose good investments. There is lots of information available to help you, but as not all pensions give you access to a wide range of investments, you may need to switch to a more flexible pension – such as a SIPP – to make the most of the opportunities.

Our Best SIPP is a great way to get started. There are a wide range of investments to choose from and you can take look at them in Our Best Pension Investment Ideas guide.

How much are you paying in?

Can you afford to pay more into your pension? You might not be paying as much into yours as you can, but the more you pay in, the more your investments can grow for retirement.

Even small amounts can help, so it’s a good idea to check up on your pension to see if you’re using as much of your allowance as possible.

This chart shows how two pensions (that hold the same investments) grow over time. The £300-a-month pension is growing at a much faster rate than the £100-a-month equivalent. Of course, this isn’t too surprising as more money is being paid into the pension, but it also benefits from compounding – the snowballing effect of investment returns generating more returns. Einstein apparently called compounding the 8th Wonder of the World!

Monthly savings – they add up

 

Consider consolidating with us to gain more control

Consolidating your pensions in one place makes them easier to manage. You can keep an eye on them because one account means one balance, so it’s easy to review how much you’re paying in fees as well as investment performance. Our Best SIPP is a great option for your personal and workplace pensions. We give you plenty of investment ideas along with a large range of high-quality investments to help you make the most of your money.

It’s quick and easy to transfer to us. We can do all the paperwork and with new electronic transfers, you can be set up and ready to go in as little as 15 days (some paper-based pension transfers from older providers can take longer). And what’s more, we put £500 toward any exit fees you may receive from your previous provider***.

Transfer now

 

Important information

The graph is based on investment returns of 1% and 5% per annum, exclusive of any fees (which may vary from provider to provider), compounded annually. All figures quoted are for illustrative purposes only. The value of investments, and the income derived from them, can go down as well as up and you can get back less than you originally invested.

SIPPs are not suitable for everyone. If you don’t want to invest across different asset classes or don’t think you will make use of the investment choices that SIPPs give you then a SIPP might not be right for you. Please contact us for guidance or advice if you are unsure whether a SIPP is right for you.

*Money Saving expert, 23 October 2018

**Before you consider transferring a pension, it is important to ask yourself: Will I lose any valuable benefits or features from my existing pension plan? Will I incur any penalties on my existing pension if I transfer? Is it an occupational final salary pension scheme? (in which case it is very unlikely to be advisable to transfer) Have I considered the charges on my current plan? (a new arrangement may be more expensive – especially if you have a stakeholder pension).

***Terms and conditions apply. Exit fees may apply if you leave Bestinvest.

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