What's So Wrong With Pensions?



What's So Wrong With Pensions?

By Stacey McVeighty | Thursday, 16th October 2014

This is a guest blog from Gregg Crawford of Informed Financial Planning

For years pensions have received a bad press, brought about by perceived poor returns, mis-management and un-realistic guarantees.

I still regularly hear clients tell me that pensions don’t work and that they wish they had spent the money or bought an investment property.  In reality however it is very easy to look back and pick a growth area (such as property) and say I would have been better off if I had done that.

I do firmly believe in a robust diversified investment strategy to help us save for our retirement.  This quite literally means that we shouldn’t put all our eggs in one basket and if we can, ideally our retirement provision should be made up of different types of assets, those being;

  •  Pensions, ISAs, Property, Savings and perhaps a Business

Just as important is to ensure that your overall portfolio is managed/reviewed in line with your expectations and objectives.

Despite the bad press, Pensions have always had some very attractive features which have made them a worthwhile planning tool for our retirement.  However the recent announcements from the March ’14 Budget and the subsequent shift on the death tax legislation, have actually made pensions an EVEN MORE attractive savings vehicle.  This is one which will hopefully enable savers to see how this pot of money can be used in future and also to entice savers to contribute more in the present.

The days of employer funded Final Salary Schemes are gone and the State Pension age is forever increasing.  This means we need to SAVE MORE or LIVE OFF LESS in retirement.  Most of us will have/need a Personal Pension, however we are still too quick to neglect our pensions.\n\nInstead we concentrate on the here and now, we shop around for our car insurance, switch our gas and electricity and sometimes switch our bank accounts for that extra 0.5%!!  These are all sensible things to do and will save us money, however often we are throwing money away by just leaving our pension fund or ignoring the tax benefits of using them.\n\nIf you live for the now, you may struggle to live in the future!!

The good thing is that if you have not yet retired it is not too late to look at your pension and to find out what it can actually do for you.

Don’t just leave it and hope that it will be alright;

  • Get Independent Financial Advice;
  • Act now and give yourself a real chance of achieving your retirement goals;
  • Make sure that your adviser is there for you every year as you approach retirement and also whilst you are enjoying it.

Just like your car insurance, your retirement provision including your pension needs to be reviewed!!

If you would like to discuss your pension or any other financial planning matter, please in the first instance speak to Stacey.