So, we all have them (or should do), and tend to just pay into them and then leave them alone. Is that all we need to do though? We asked Ronan Gregory from Ronan Gregory Financial Planning about pensions and what we should be considering.
Q. My pension – that’s what the government will pay me when I retire, right?
A. To an extent, yes. The Government will pay you a pension when you retire, depending on how much you have paid in National Insurance over the years. Generally it is a small amount, and can help cover your basic living costs.
Q. Do I need to save more for retirement then?
A. It is always advisable to save for retirement. There are always changes with the State Pension, and having additional savings can mean you can have a better lifestyle when you retire. It also means that any future changes with the state pension are less likely to have an impact on you.
Q. As a business owner, I joined a NEST (National Employment Savings Trust) scheme for my employees when Auto-Enrolment came in. That’s all I need to do isn’t it?
A. That’s great that you are helping your employees save for the future. There are a few issues with the NEST schemes though, it’s a DIY service as you need to do your own homework and they aren’t very flexible, charges are different, and you can’t transfer any existing pension funds into it, which you and your employees may have been paying into previously. The options for where the money paid in is invested are also much lower, meaning that you may not get the returns you hoped for. Also re-enrolment occurs approximately every three years after an employer’s staging date. Essentially cyclical re-enrolment is a repeat of the process the employer carried out on their staging date (or deferral date if they used postponement to postpone all their workers at staging).
Q. So there are other options available other than the NEST scheme?
A. Definitely. If you need more support from myself and the new provider we can certainly help! Whether a NEST scheme is right for you and your employees depends on many different factors. Pensions aren’t a one size fits all thing, and it is well worth having a review of your pensions, as there are other ways to save for your retirement. If you have lots of different pension pots, which can happen if you have had a few different jobs over the years, you may also want to look at consolidating them into one, which will potentially reduce the charges you are paying on them.
Q. What about if I am a sole trader?
A. This is something you really do should look into as soon as possible. The longer you leave it, the less money you could potentially have to retire on. We work hard, and deserve to be able to live comfortably after we finish working, and don’t want to have to keep working past the age when we feel we should be slowing down. Paying into a pension as soon as you can will give you a potentially higher amount to live on once you stop working and also offer valuable tax relief to your business.
Q. Ok, so what do I do now?
A. Dig out your pension details, and give me a call. I’m happy to chat with you about what you have in place already. We can help work out a plan for you going forward to make sure you will be comfortable in your retirement.
Ronan is an Independent Financial Adviser, working within the Abacus group. Based in Caerphilly, and covering the South Wales area, Ronan can help you review your pensions, and help you ensure your financial matters are in order. To book an appointment, contact Ronan on 02922 677 184, or contact him here.