No matter how near or far away your retirement may be, it’s important to get to ‘know’ your pension – and not to be afraid to ask for help in making choices about your life savings. When it comes it pension management, it pays to know how to manage your pension and ensure you have a happy and comfortable retirement.
The Money and Pensions Service is encouraging people to start conversations about managing their money.
Jamie Jenkins, head of global savings at Standard Life, tackles three common questions about pension management and offers some essential tips on how to manage your pension as you get ready for retirement.
Pension management – how to manage your pension
1. How do I know how much I need to save for my pension?
Don’t put off calculating how much pension you’ll need in retirement as part of your overall pension management plan. Take time to work out how much pension you’ll need to fund a comfortable retirement when deciding how to manage your pension savings strategy.
“While the state pension is a good start, it’s unlikely that on its own it will give you the kind of lifestyle you might have in mind later on in life. Taking some steps to boost your potential retirement income now, perhaps by increasing contributions to a private or workplace pension, means your ‘future self’ will very likely thank you.
“Essentially, people may need to accumulate a pot of money to last at least what could be 30 years or more in retirement. To check you are on track you can use a range of online tools and calculators or pay for professional financial advice.”
For more advice read the Wise Living retirement savings guide to learn how to calculate how much money you need to save for retirement.
2. At what age can I start to take money from my pension?
Retirement ages have been shifting of late as government policy changes retirement age. Knowing when you can – or want – to retire is an important part of any pension management plan.
“When and how you take money from your pension is a big decision – it can affect how long your pension pot lasts. At the moment, the state pension is generally payable when people reach their mid-60s. But the state pension age is rising in the coming years, reaching 67 between 2026 and 2028.
“You may be able to take money out of your private pension from the age of 55. But before you take any money out, it’s important to consider if you really need to.
“Generally speaking, a quarter of money taken from defined contribution pension pots usually tax-free, and the rest is liable for income tax. If your pension provider knows what your plans are, they can help you by providing relevant information and options for how to invest.”
Need to add more money to your pension? Read the Wise Living guide to topping up your pension pot.
3. How can I track down lost pensions?
Knowing where your pension pot is and where savings are invested is an important part of how to manage your pension. Lost pension pots could mean you miss out on important retirement income, so make tracking down lost pensions a key part of your pension management plan.
“There are an estimated 1.6 million lost pensions in the UK, worth around £20 billion. But don’t worry – all you need to know is the name of your employer or pension provider to track a lost pension down. If you don’t have those, you can use the UK Government’s online Pension Tracing Service.
“If you’ve found a lost pension and you want to make it easier to take control of your savings, you might want to consider consolidating all of your pension pots into one. Your pension provider will provide more information on things to consider.
“It may make sense to speak to an expert to get information on your situation, just in case you’re giving up any valuable benefits or guarantees by combining your pensions.”
Want to know how to manage your pension? An IFA can help. Read Wise Living’s guide to finding the pension IFA pensions advisor to help your pension management plan.