Is it time you reviewed your pension?
September 20, 2023
We recently released the results of our 2023 pensions research, which showed some concerning gaps in pension planning. 57% of us are planning to use cash savings to support our retirement and there is a real risk that people’s pensions will not be enough. The cost of living crisis and a reduction in home ownership are also impacting this. Let’s take a look at pensions.
Why save into a pension
Saving for retirement matters. A pension is a long term savings plan to provide a fund for your retirement. People live longer now than ever before and lead active lives well into their golden years. It’s essential you plan financially for this later stage of life. The good news is it’s never too late to start.
Learn more about starting your pension.
How much should you invest?
Consider the amount of income you’ll need in retirement and where it will come from. Use the Pensions Authority calculator to work out your needs. This online tool estimates the amount you’ll need to have a sufficient pension pot.
The calculator also shows you how much you need to put in if you are getting closer to retirement. You’ll need to invest more of your salary in this case. It’s important to know that the money you’re putting into your pension stretches further than in normal savings. This is because the pension payments you make are long term and benefit from tax relief.
Review your pension
It’s important to check your pension regularly, at least annually. You may have been paying the same amount into a pension scheme for years. If it’s an older pension, you may be paying higher fees than necessary.
Circumstances are bound to change as you move through life’s different stages. You may have a family, take out a mortgage, change jobs or move up the career ladder. These factors all affect the amount you can afford to pay in. Your expected financial needs in retirement will also change over time.
Your pension plan may therefore be well overdue an overhaul. Here are our top tips:
- assess your life situation and what your current needs look like after you retire
- talk to a financial adviser – you might have scope to pay more
- maximise your contributions to avail of the highest tax relief available
- look into making additional voluntary contributions (AVCs)
- consider moving your pension to a different fund
Did you know?
Auto-enrollment will soon be introduced. This means people will automatically join a pension scheme when they start a new job or in their current job if they haven’t got a pension already.
Visit our money hub for more information on pensions.
The Pensions Authority has further advice and guidance.
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