After years of working and earning a salary, once you have retired your pension pot is likely to become your main source of income. Indeed, under new pension changes, from April 2015, you could take the whole fund in cash if you wish! So getting the most out of your pot is vital.
For those of us five or more years away from retirement, there is one simple thing we can do now to make our money work harder in preparation for retirement. But your existing provider might not want you to know about it!
What many people do not know is that every month your pension plan has money taken out to pay fund management charges. This is more likely with older pension funds – but you may be able to reduce these charges by switching to a more competitive deal on your plan.
Searching for the best deal is something we all do as part of our everyday lives. Who doesn’t compare prices when they are grocery shopping, or switching energy deals? Yet, how many of us have, or know someone who has – taken the time and effort to switch their pension to a more competitive plan ahead of retirement?
Of course, switching pension providers is a more serious and long-term decision than getting a good deal on your car insurance, but much like comparing deals on a mortgage, taking the time to get a better deal on your pension plan could see you enjoying more money in retirement.
According to latest figures, in 70% of cases people could potentially increase the value of their pension without contributing a penny more to it. In fact, some could potentially increase the value of their pension pot by 20% or more simply by reducing their pension plan charges*.
Excessive charges impact how a pension grows, so switching to a better value fund now while you still can, could result in more money in retirement.
You may also find that your current plan’s investment fund is not suitable to your current attitude to investment risk. Generally, as people get closer to retiring, they often prefer their investments to be less exposed to the risk that accompanies fluctuating market conditions.
You may have agreed to invest your money in riskier funds when you first started paying into your pension, as many people do, but if you have not had your plan reviewed for some time – or at all – then you might benefit from a policy review to ensure your plan more accurately meets your current needs and is all on track.
It is free to have a policy review to find out how much more you could potentially get from your fund by switching to a better value fund, or to find out if you have your money invested in riskier funds than you would perhaps like at this time.
In order to be offered a free policy review you need to:
There is never any obligation to proceed, and a fee is only payable if you choose to accept the recommendation made to you.
When you take advantage of this service a dedicated specialist pension adviser will research the market on your behalf and provide you with independent advice to see if you can get a better deal by switching your pension to another plan with more competitive management charges.
You will also receive a regular annual review of your plan to ensure it remains on track to meet your future needs and circumstances.
To speak to a specialist about switching your pension fund to a better deal ahead of retirement, call the Retirement Line team today on 0800 652 1352 (or local rate mobile number 01733 307 240).
*Data from pension comparison company Profile Financial