Iona Bain’s top tips to pay your pension some attention
If someone was to make a film about your retirement, what would it be called?
For Pension Awareness Week, money expert Iona Bain shares her five top tips to 'pay your pension some attention': When was the last time you paid your pension some attention?
Around 80% of employed people save into a workplace pension, so you might have one without even knowing. If you can’t remember, don’t worry! Here are my five top tips to get to know your pension better and understand where you’re at with your retirement saving so you can look forward to the future with confidence.
1. Find out if you have money hidden away in lost pensions.
There’s around £26bn in unclaimed pension money out there, and some of that could be yours! You can track down this cash by having a think about all your old jobs, then going through any letters or emails previously sent by employers. Within those you may find some details for a pension (or two!) you could be reunited with. If you need more help, the government-backed Pension Tracing Service is free and easy to use.
2. Check in with your pension pot.
It’s good to know how much you’ve already built up in your pension pot so you can start to understand what kind of income that could give you in retirement. It’s simply a case of going to your provider’s website or app and logging in from there. Once you know how much you’ve got, you can use the free pension calculator on the Money Helper website to see how much this could generate for your retirement kitty.
You can also find out what your state pension will be worth (and whether you can make extra contributions to boost it) by going to the Gov.uk website.
3. Picture the kind of retirement you want.
You may have certain dreams and ambitions that you’re itching to achieve, or perhaps you just want to know you’ll be comfortable and happy. Either way, figure out how much you’ll need to get the retirement you want – don’t forget to factor in inflation and how that will affect the cost of stuff in the future. You can use the Retirement Living Standards website to help you understand how much you need to save to get the kind of retirement you’d like, based on different levels of spending.
4. Aim for a saving target that’s realistic for you.
Work out a percentage of your monthly income that you can afford to put into your pension. The Living Wage Foundation suggests the 12% rule of thumb to help ensure you have a good standard of living in retirement. Importantly, this includes contributions from your employer too (e.g. 8% from your own salary and 4% topped up by your employer). But of course, everyone has different needs so just think about ways you could up your contributions either now or in the future. For example, if you get a pay rise in the future, you could ask your employer to put some or all of it into your pension pot.
5. Think about other ways to boost your pension pot.
Times are tough for lots of people right now, so if raising your contributions isn’t an option in the short term, there are other things you can do. For instance, you could ask your employer whether they can put more money into your pension pot - don’t forget about the 12% rule of thumb if it’s helpful to reference that standard.
Asking about pensions should be a key part of your questions when you’re interviewing for a new job. Don't forget that your pension is essentially future pay, so ask about that as you would with the salary you're going to receive.
Ask your employer to confirm:
- The contribution percentages that both you and they pay
- Whether that percentage is calculated on full pay or something different
- Whether your employer will "match" your contributions if you're able to pay a little bit more, i.e. if you pay another 1%, will they also?
You can also find out how your pension pot is invested to make sure your money is working as hard as possible. For example, your pension could be invested more adventurously if you’re younger, with the possibility this will grow your pot more in the long-term, because you have a longer time to ride the ups and downs of the stock-market.
That’s it – with just a few simple steps, you can get to know your pension prospects and feel more confident about the future. You can also visit the pensionattention.co.uk website for more information and resources.
Pension Attention is an industry-led engagement campaign coordinated by the Association of British Insurers (ABI) and the Pensions and Lifetime Savings Association (PLSA) and funded by a large proportion of the pensions industry.