Many people start a pension and then do nothing in terms of looking at their medium and long term objectives. You need to ask yourself is my pension on track to achieve my goals? You may be looking at retiring early or just ensuring you have a comfortable retirement at your normal retirement age.
Either way – what ever your plans, you must review your pension. The following lists the top three reasons why you should look at your pension on a regular basis.
1. Cost – are you paying too much for your retirement?. You are charged a annual management fee, commonly called the AMC ( annual management charge). For most stakeholder based vehicles this will equate to circa 1% charge. If you paying into a personal pension (PP) or self invested pension (SIPP) you could be paying a lot more, for no real benefit.
2. Pension Type – What pension vehicle are you using? Stakeholders are the cheapest way to invest for your retirement – unless you wish to invest in a wide range of funds you should not be paying into a PP or SIPP vehicle.
3. Cash Flow – when do you need to access your pension? If you are close to retirement (5 years or less) you should be looking at placing around 20% a year into cash to safe guard your pension fund. If your within a year of retirement around 80% of your fund should be in deposit based investments.
You should review at least once a year, blindly paying into your pension every month without accessing the situation will not achieve your medium to long term goals. Your financial advisor should be able to provide with a forecast and equate your pension benefits to see if your savings are on track.