Pension Review – Why You Should Regularly Review Your Pension

In this pension review guide I’ve looked at the different types of pension available, how you can potentially reduce your costs, and what areas of your pension you should be examining in order to ensure you have the best possible package to suit your unique requirements.

Do you know what you are paying in charges on your pension? Have you any idea how your investments are performing within your pension or indeed what level of risk you have taken on those investments?

Also consider: Best Pension Providers

What is a pension review?

A pension review is your chance to take a closer look at your current pension options to assess the fees, charges, performance and what your overall retirement plans are.

Contrary to popular belief, a pension isn’t something that can be set and forgotten about, as time and time again it has been proven that consistent pension reviews can lead to better outcomes, and therefore a better standard of living in your retirement years.

No one wants to spend their retirement worrying about money, and providing enough to live comfortably, without financial stress, is entirely achievable with the right level of planning.

What is a pension?

Simply put, a pension is a pot of money that provides an income for you to live off in your retirement. The reason people will save into a pension rather than a simple savings account, is that the money you deposit into your pension will trigger attractive tax benefits at your marginal rate. Therefore a basic rate taxpayer will receive £20 from the government for every £100 they save into their pension.

There are two main types of pension including:

• Defined Contribution Pensions
• Defined Benefit Pensions

Defined Contribution

You can access this pension from the age of 55, although you can choose to continue to work and save into your pension beyond that point should you wish.

This is one of the simplest pensions to review and switch to an alternative pension provider should this make sense for your circumstances.

Defined Benefit

Defined Benefit works a little differently as you pay money into a pension scheme in exchange for a retirement income. These are also referred to as final salary pensions and the amount you are paid in your retirement is dependent on the number of years you have worked and your salary.

These are more complex to review and transferring your pension funds to another pension provider would require a cash equivalent transfer value which is awarded to you when you relinquish your share of the pension scheme. You would require professional advice in order to transfer out of this pension scheme.

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