5 steps to get pension savvy
Looking after your pension is the first step to making sure you’re set for later life when you no longer work. This guide should set you on the way to understanding your pension, how much you should receive and how to plan ahead.
1. Look into the future
It can be scary thinking about retiring and relying on a pension pot for the future but it’ll creep up on us all and it’s best to be prepared. Consider what your monthly expenses are now and estimate what they could be at the time that you retire. Take into account inflation, children, your mortgage and whether you’ll be mortgage free by the time you retire and also what your plans are for retirement. For example, if you’re looking forward to travelling the world when you retire you’ll definitely need a chunkier pension pot than someone that’s looking forward to a slower pace of life.
State Pension age will rise to 65 for both men and women by the end of 2018 and will increase to 66 by 2020. You will need 35 years of National Insurance contributions to qualify for the full State Pension, regardless of your age.
2. See how much you have
Search for the Department of Work and Pensions calculator online and check your state pension at Gov.uk to work out how much you will potentially have later on in life. Your current pension provider will also send you a statement every year to let you know how much you have in your pot. Most pension providers also have online portals where you can log in and see how much you’re accumulating over the years. Keep an eye on it as you would with your standard online banking.
You may want to consider consolidating any pensions from old pension pots from previous jobs to keep them all together and it may mean that you could be paying less in annual management charges. However, you should seek independent financial advice before you consolidate any pensions.
3. Up your contributions
Review the levels of contributions that are being paid into your pension from both employer contributions and your own, and if you are able to, consider increasing the level of your own contributions. Small increases from your monthly pay early on in your pension saving can lead to large increases in the future because pensions benefit from compound interest which is essentially interest on interest. The sooner you get money into it, the more you will have at retirement. Some employers may be willing to match any increase in personal contributions, so it may be worth discussing this with your workplace.
Remember that the size of your pension pot will be subject to investment performance and is not guaranteed.
4. Seek financial advice
Expert advice from a qualified financial adviser is a great way to really get your head around future finances. We work very closely with Wren Sterling financial advisers and believe that they are the perfect choice to bring clarity on financial planning with a no-obligation first appointment. Our qualifying members can benefit from our Member Rewards programme, which includes exclusive access to independent financial planning from Wren Sterling. Visit a branch or call us to find out more about speaking to a Wren Sterling adviser.
Find out how you become a qualifying member of The Nottingham here.
5. Rinse and repeat
Remember, just because you have sorted out your pension once it doesn’t mean that it’s done forever. You should regularly review your pension pot and consider making additional contributions as and when you can. Regularly reviewing your pension and your savings leading up to retirement should offer you the potential to maximise your returns. Look after your pension and your savings and they should look after you in the future.
Nottingham Building Society, Nottingham House, 3 Fulforth Street, Nottingham NG1 3DL, is an introducer to Wren Sterling for Financial planning, including investments, pensions and protection. Wren Sterling is a trading name of Wren Sterling Financial Planning Ltd, which is authorised and regulated by the Financial Conduct Authority; registered No. 665653. Castle Marina Road, Castle Bridge Office Village, Nottingham NG7 1TN. Registered in England No. 09157918.