Early retirement will maybe never seem so attractive that at that stage in life where juggling family commitments coincide with peak career responsibilities.
Since April 2017 employers have been obliged to provide a Workplace Pension for their employees. While, as discussed earlier, outgoings may be stretched to their limits, somehow pension contributions that are deducted from gross income, and don’t get as far as your straining bank balance, seem easier to swallow.
The nature of modern employment means that few people will have one employer or one single pension fund throughout their working lives and it’s easy to lose track of your retirement savings.
If you know or think you know, that you had a pension from a previous employer who has since lost contact with you (not everyone would think to tell previous employers when they change address) a free-to-use Government department, The Pension Tracing Service https://www.gov.uk/find-pension- contact-details can help trace these ‘AWOL’ pension funds. Often the only information they need to locate your pension savings is your National Insurance Number.
Usually, a Workplace Pension holder has access to an online portal and has the ability to change the fund into which their pension funds are invested. Online investment risk questionnaires will be a good starting point as to the level of investment risk you are comfortable with for your own pension as opposed to the default investment fund chosen by your employer or insurance company.
And if retirement could be twenty years or more away, investment performance would suggest that a more adventurous investment strategy has historically tended to outperform their more cautious counterparts over longer periods of time.
QUICK WIN: Ensure you are receiving your maximum employer contributions. While to meet Auto-enrolment pension scheme standards, employees must contribute a minimum of 3% of qualifying earnings to supplement an employee’s 5% of qualifying earnings, some employers are prepared to pay more than these minimums, in some cases matching or more than matching increased employee contributions. These increases in your own contributions are less painful when deducted from a payslip than the same contributions might be if they were made as a monthly direct debit. Any additional employer contributions are as good as a pay rise – ask your boss or HR department for a pension pay rise!
- Disclaimer:Three Counties does not advise on mortgages and debt and this post is for general information purposes only. As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments. This blog post was taken from a Three Counties ebook, Your Family, Your Finance, Your Future – click here to download the full guide.
- Writer Bio: Martin Howe is a Director with Three Counties and has over 20 years’ experience in financial services, specialising in all areas of financial planning.