Pension Awareness Week runs from 11 to 15 September, and this year celebrates 10 years of making a positive difference.
To celebrate, the Pension Awareness website has put together ten key pension questions that will help those with retirement.
1. How much am I paying in?
Many people do not know how they are contributing to their pension, or that their employer contributes some money too.
Most of us with a workplace pension will have what is called a "defined contribution" pension, which means the amount of money you have depends on how much has been paid in and how your investments have performed.
For defined contribution pensions, the minimum amount you have to pay in is 8% of your salary. This is a 5% contribution from you and a 3% contribution from your employer, but that is the minimum.
A lot of employers will pay in more than the minimum, and many may match or even double your contributions.
2. Have I lost or forgotten about a pension?
Many pensions can get misplaced, or the name of the provider, or pension account number forgotten.
Last year the Association of British Insurers (ABI) says there is around £26 billion to be claimed from lost pensions.
Every pension provider is obliged to send an annual statement, so it is worth checking old paperwork in the house, and old emails.
If you know the name of the pension provider or can contact your old employer, they may be able to help. If you do not know any information the government has a free service called the Pension Tracing Service which can help.
3. How much pension will you need?
A good way to work out how much you may need is to jot down all your expenditures now, and use this as a guide to create a plan for how much you will need in the future.
Group your expenses into different categories like essentials, subscriptions and travel. Essentials will include things like mortgage, rent, utilities, and food. Some of these costs may go down, or you may not need to pay out for some of them anymore.
You can then factor in the fun things you want to do in retirement, like travelling. Ask if you are on course for a retirement that covers all your needs?
The Retirement Living Standards provides a rough guide for what income you may need to attain various standards of living for both single people and couples.
4. How much state pension will you get?
Your state pension is an important part of your future planning, so make sure to get a State Pension forecast and check your State Pension age.
Everyone is entitled to the State Pension. You will qualify for a State Pension if you have made at least 10 qualifying years of National Insurance contributions, or received National Insurance credits (paid to carers and people on certain types of benefits).
You need 35 qualifying years to get the full State Pension amount, which is currently £203.85 a week for the 2023-2024 tax year.
Your forecast will be able to tell you how much you are on track to receive.
5. Is your pension invested in the right funds for you?
If you do not want to, or have never considered where your pension is being invested, your defined contribution pension is probably sitting in your workplace pension's default investment option. This is the one you are automatically put into if you do not choose anything else.
These funds aim to satisfy the many, not the few. They take a "one size fits all" approach which although not a bad thing, may mean that your money might not be working as hard as it should be, or you may not know if your pension is being invested in the most ethical option.
You can choose and manage your own funds, and this may be better suited to you, so it can be worth reviewing all the options available and to consider which might be most appropriate for you.
It is easy to look into your pension investments. Your employer or pension provider will be able to help, or you can check through your online pension account.
6. What are your pension charges?
All pension providers charge a small fee for looking after your money, and these will be different depending on the provider. These fees are usually called an Annual Management Charge or Servicing Charge.
Over time fees and charges can make a huge difference to your returns, so make sure you understand exactly how much your pension costs.
If you have a workplace pension, you will probably pay a lower charge than if you take out a personal pension.
If you are thinking of combining any pension pots, make sure you compare the charges between the different providers to make sure you are getting the best deal.
7. Do you know who you are leaving your pension to?
You cannot usually leave pension savings in your will, so you will need to make sure you have nominated who you would like to receive your pension if you die. This lets the Trustees know about how you want your savings shared.
You can choose family members or close friends, but make sure you keep the details of your beneficiaries up to date.
Usually, the Trustees will follow your instructions, but if you do not name anyone it may be up to the discretion of the Trustees as to whom the value of your pot is paid. If your form is out of date, your savings could end up going to someone you would rather they didn't.
You should be able to nominate a beneficiary through a form from your pension provider. If you are not sure where to find the form, ask someone from your HR or pension team.
8. Do you know how you can take your pension money?
Life's milestones often come with big financial decisions and taking your pension money is probably one of the biggest. Before you reach retirement, you will need to do some research on your options.
You can normally access your defined contribution pensions from the age of 55 (or age 57 from 2028), and you do not have to stop work to begin taking it. Whatever way you choose to take your money, you will usually be able to take 25% of your pension pot as a tax-free lump sum.
One way of taking your pension money is a guaranteed income for the rest of your life, for as long as you live. This is called an annuity and you will need to buy one of these from an insurance company. Another way is to take your whole pot in one big go. But you will need to be mindful of tax implications and need to budget your money carefully or you could run out.
Finally, you can take your money little by little, but by either "flexi-access drawdown" or taking an "uncrystallised funds pension lump sum". Not all pension providers may offer you all these options, so you will need to check what options you have available to you.
9. Have I registered for an online pension account?
An online pension account makes it easier for you to manage your pension and keep it in check. You might have to register for an online account, as you do with your regular bank account.
This is normally easy to set up, and you can speak to your pension provider or HR team to set it up online.
10. Have you made use of the free services available?
The Government has a free and impartial service available called Pension Wise. If you are over 50, you are entitled to a free session with their experts to discuss the various options you have to access your pension.
There is also lots of really helpful money and pension resources available on the MoneyHelper website.
The Pension Awareness website recommends making use of the free guidance available before you do anything with your pension, and if you feel like you need more personalised support before making any decisions, take financial advice.
For Pension Awareness Week, there are lots of live, online shows, explaining a variety of pension and money topics, which you can access here.
