Pensions have been a hot topic this year with the Coalition government announcing changes that have shaken the system. When the time comes for you to draw your pension, you may be given the option to do whatever you wish with it.
But, will you know what to do, how much your pension pot could be worth and what level of income it may generate?
Pension Statements Need to Change
Typically, advice and guidance about your pension and the options available to you will come just before retirement; at a time for many which is too late and provides little opportunity to make changes or top up deficient funds.
The only contact made by the pension provider throughout the life of pension is usually in the form of an annual pension statement. A pension statement is a reflection of what your pension may be worth at the selected retirement age and its current value at the time the statement is produced. The information they provide is limited, and now the industry is calling for a reform to prevent statements being used as a purely tick box affair by pension providers to meet regulatory requirements.
A previous review of pension statements found that of the top 20 generated by volume only one provider asked if individuals would like to increase the amount they paid in. That equates to 95% of pension providers, not providing options on contribution levels.
The consensus of the industry is that pension statements presently are not delivering the right information to meet the needs and objectives of pension savers. Input and information is required on a regular basis, so that individuals can focus on their pension planning position, both at that moment in time and considering what this could mean for them in the future.
Regular information could ensure that you are well informed, meaning that as you near retirement you have an accurate picture of your pension situation. Subsequently you can be safe in the knowledge that you have done everything in you power to ensure you don’t receive a pittance from your private and state pensions.