Independent financial expert Andrew Oxlade answers a reader's query about pensions.
With the ‘jobs for life’ concept virtually extinct in recent decades, many people have unintentionally become collectors of pensions – so you’re not alone.
Your pensions are your most important long-term savings, so although it may seem a chore now, time spent keeping track of their value to help ensure that you are saving enough for your retirement will reap benefits in the long-term.
Many people believe that the best option is to consolidate all their pensions into a single plan. But while this may seem easier to manage, it may not be the best option in terms of retirement income, because there are so many different sorts of pensions. Employers’ pensions can either be money purchase (also known as ‘defined contribution’); final salary (also known as ‘defined benefit’), or stakeholder schemes. The best course of action depends on the types of pension you have. You can find out more about the different sorts of pensions in my previous article.
The first step is to collect your most recent statements from every employer/pension fund you have investments with. If you don’t have one for a particular pension – which is very possible if you have moved home and not given new address – contact the provider direct. You can find their contact details using the Government’s Pension Tracing Service (0845 6002 537).
If you only have money purchase schemes, you can calculate and monitor the value of your pension by subscribing to a website such as Pensiontracker.co.uk, which charges £19.95 a year. Once you enter your annual pension statement you can see a breakdown of how your money is invested and check the comparative performance of each fund.
If you have more than one type of pension you may be better off talking through your pensions with an independent financial adviser (IFA) who specialises in them. They will be able to help you review your plans and establish what, if any, changes you need to make in order to achieve your retirement aims.
- Previous article answering queries about pensions and student loans
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The information in this article is correct as at 16 July 2010.