Money Matters

My friends think I don’t live in the moment. Why? Because I save or invest the extra income I’ve earned, rather than spend it on clothes.

As a student confined to a miniscule budget, I can’t help but grimmace at the thought of not planning for my future. My friends, however, disagree.

Retirement planning should be a primary concern for many, with figures by the National Association of Pension Funds revealing that only 23 per cent of final-salary pension schemes will be open to new joiners.

Unbiased.co.uk has compiled a list of top ten tips for retirement planning, but I’ve chosen the best bits:

1. Peter McGahan, Worldwide Financial Planning

The Basel II legislation could cost annuity providers a substantial amount of money and in turn drive down the rate of future annuities. The impact of quantitative easing could also drive up inflation, which could have a significant impact on pushing annuity rates up. Taking one today rather than deferring could prove to be a mistake.

2. Colin Jackson, Baronworth Investment Services

It may fly in the face of current wisdom, but those people who have 15 to 20 years to go before they retire should consider up-sizing even if this means buying a property that is too big for their actual needs.  Over the medium to long term, property prices have historically risen.  Buying a larger property every, say, 5 years means you could end up with a valuable property upon retirement.  

3. Daniel Clayden, Clayden Associates

Always check if your employer offers any type of pension arrangement.  If they offer a money-purchase arrangement, where the level of eventual benefits will be mainly dependent on the size of the fund that has been built up at retirement, the additional ‘matched’ contributions from your employer will help you to build a bigger fund. 

4. Jason Witcombe, Evolve Financial Planning

Get your sums right. Work out your total income now and where it might be in the future. If your income will always be under the higher-rate threshold then take advantage of any pension schemes through work. If you expect it to go higher, then you should consider delaying further contributions until you can get a 40 per cent tax relief.

5. Danny Cox, Hargreaves Lansdown

Don’t ignore the importance of an Individual savings account. The income from an Isa can complement a pension. It’s also free from further income tax and there is no capital gains tax on the profits.  On top of this, the best Isas can be cashed in at any time, giving you access to your capital if needed. 

6. Robert Clarke, Almary Green Investments

Ask yourself the following all important questions.  When was the last time you reviewed how much you are paying in? Have your contributions kept pace with any increases in earnings you may have had? Do you fully understand what fund or funds you invest in and is the risk profile of those funds still suitable for you? Have you got old pensions sitting in poor funds with high charges?

7. Gordon Bowden, Quainton Hills Financial Planning

Consider other products such as Guaranteed Annuities, Investment Backed Annuities, Phased Vesting, Income Withdrawal and Impaired Life Annuities.

8. Andrew Swallow, Swallow Financial Planning

Firstly, start your retirement planning early. If your employer has a pension scheme then join it. Secondly, retire late.  Think long term – if you are in your 20′s you may well have a life expectancy into your 90′s. 

9. Rob Simpson, Simpson Financial Services Limited

If you are a member of your employer’s pension scheme ask them for an up to date benefit statement.  If you’re not a member of the scheme then ask for a joining pack.  If you pay into your own personal pension as well or instead then ask your pension provider to send you a new estimate. 

10. Tony Catt, Hanson Wealth Management

Pay off debt as soon as possible so that there is no mortgage or any other debt payments to be made from pension income.