Understand the value of your pension plan or risk going short when you retire – that’s the stark warning from wealth management experts at EFG Independent Financial Advisers in Birmingham and Wolverhampton.
Managing director John Male said that research for Standard Life had revealed that almost threequarters – 74 per cent – of those under 45 who are saving into a pension do not know the value of their pension investments.
“More worryingly, even more, some 79 per cent, have no idea what annual income they will get from their pensions when they retire,” he said.
The data from Standard Life shows that over two fifths (43 per cent) of those in the United Kingdom who have taken out a pension plan have two or more pensions.
John Male said: “Despite the fact that they should be receiving annual pension statements, many are not aware of the total value of their pension pots, or, the income they can currently expect to receive when they retire.”
Only 26 per cent of under 45s with pensions said they knew what their pension pots were currently worth and just 21 per cent said they were aware what their likely pension income would be in retirement.
Mr Male commented: “If they leave it too late, they may find they have very little time to rectify the situation.
“People tend to start thinking seriously about retirement in their mid to late 50s, by which time the amount of money needed to ‘catch up’ can be inordinately high.
“Together with your home, your private pension is likely to be your most valuable asset and you need to be aware of how it is growing during your prime earning years, so you can make sufficient provision for later years.
“Inevitably during those years, we are often preoccupied by a young family, moving house, changing jobs and perhaps private school fees. Pension provision can be pushed down the “To Do” list.
“The next time you receive your annual pension statement perhaps it would be a wise move in the long run to sit down with a professional adviser who can help you plan for the future.
“A little extra saved every month early in your working career can make a world of difference when you reach retirement age, and as you mature it may be that having multiple pension pots is not the most efficient way of creating a good retirement income.
“These are all factors that need careful consideration if you are to enjoy the standard of living you would like in your retirement years,” he said.