Page 69 - Phonebox Magazine March 2012

The National Association of Pension Funds has recently released the results of research which was conducted by the Pensions Policy Institute on its behalf. The survey looked at factors that affect the final pension that people in the private sector will enjoy in retirement. The factors taken on board included charges, retirement date, age at which contributions start and the annuity rate secured at retirement.
Some of the findings of this research were blindingly obvious, such as the sooner you start paying into a pension the better and if you work longer you will build up a larger pension. Its conclusion brings seven of these factors together and calculates that the difference, if totalled up, could lead to a typical private sector pension being £7,710 a year rather than £2,200 a year. This research does seem somewhat contrived, for instance it adds £990 to the value of a pension if you start paying in at age 30 rather than 40. Equally, however, you could say that there would be an enormous difference if you started at age 20 rather than 50. Another factor is that working one year past retirement age could add £550, but equally you could assume retirement at age 70 and make an even bigger difference.
Having said this, the research does raise some important issues. One of the key aspects of a pension is that the income that you
can secure when you retire is usually through an annuity. The difference between those on offer is quite marked and this is where undertaking some research and taking advice can really pay dividends. The difference in charges is also highlighted and this is an area that is always considered by an adviser when recommending the most suitable policy for a client.
However, perhaps the most bizarre aspect of this research is the fact that the investment performance of the pension is not mentioned. Arguably, this is the biggest single factor that will affect the size of your pension pot (and, therefore, your income in retirement). If you look at the performance figures of Pension Funds in the ‘UK All Companies’ sector to the start of this year, over a 10 year period the best fund had grown by 8.9% a year and the worst had fallen by 0.5% a year. Selecting and reviewing the way your pension is invested is vital in trying to ensure you maximise the value of it.
Whether you are looking to start a pension, need a review of your pensions or are planning to retire in the near future, Advison can help you achieve the most with your pension. If you would like to discuss retirement planning opportunities that may be available to you, then please call us for a free initial meeting. See our advert below.
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Finance matters
Achieving the most with your pensions
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speak to the experts about retirement planning
...in 1901 the life expectancy for a boy was 45 years and for a girl it was 49. By 2010, these figures had risen to 78 years and 82 years respectively. That is an increase of 73% and 67% in just over a century.
For every year that life expectancy increases, pensions have to fund a year more of income, putting ever greater pressure on both private and public pensions.
If you wish to review your pension arrangements or you are approaching retirement, why not contact Advison and see how we may be able to help you. Remember – initial meetings are always without cost or obligation.
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Advison specialises in Investments, Retirement Planning and Protection. We offer a return to the traditional values that only a smaller company can offer, a service we find is appreciated by the more discerning client.
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Advison Ltd is an appointed representative of IN Partnership the trading name of The On-Line Partnership Limited which is authorised and regulated by the Financial Services Authority. Registered (England) No. 5009271
Phonebox Magazine 69