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Free advice on pensions

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Remind me about the basics

The new flat rate State Pension is £159.55 a week. Of course, given that the Government has to fill a financial black hole and the population is ageing, by the time we get there, it may be somewhat smaller. Either way, it’s not loads. And btw, don’t assume you’ll get the full whack.

More than 100,000 over-50s have already been told they’d get a big fat ZERO on retirement as they had not paid enough National Insurance contributions.

To get the full State Pension we’ll all need a chunky 35 years of National Insurance contributions. As a rule of thumb, work out how many years you think you have paid NI and multiply this by £4.44. Worked for 10 years? That’s about £44 in a State Pension a week.

If your number is not enough, you’re going to have to get another pension or retirement income stream. This can all get complicated and most of us will need a helping hand and some advice. Here are some ideas on how to get this help.

I’m saving up – and I want some advice

There are two main phases to pensions, the bit where you build up your pension stash, and the bit where you take your pension. For the ‘building’ bit, you will need to decide how much to put into a pension, and how to invest it.

If you are investing through a workplace scheme, they should give you some help with this. Usually they’ll offer you a range of options, depending on your age, how comfortable you are with stock market investment and so on; alternatively, they’ll just stick you in the “default fund”, which is probably OK. 

The general rule here is this – if your employer is offering to stick extra money into a pension for you – TAKE IT!

For a private pension (i.e. one you sort out yourself, outside of work), you have the added wrinkle of which pension scheme you pick – do you go for one of the traditional pensions groups such as Aviva or Standard Life, or one of the newer online guys such as Hargreaves Lansdown or Fidelity? We tell you who we like here. These guys all have pretty helpful websites with loads of info and facts to get you going.

OK OK …but ‘ow much do I have to save!!?

If you want to check you’re on track to achieve something like a comfortable retirement, there are some handy calculators – these ones from Standard Life and Hargreaves Lansdown – are useful.  However, they can be a bit inflexible. Most steadfastly refuse to believe you might not need two-thirds of your current income in retirement. It may be simpler to use a bog-standard savings calculator like these from ThisisMoney. As an example, we were told that if we saved £200 a month for 20 years, and we got a return of 4% (not an outrageous assumption from the stock market) we would accumulate a total sum of about £73,500.

Let’s translate this in a retirement income. With all sorts of assumptions this would work out to be very roughly (total back of a fag packet)  £3,700 a year from retirement ’till popping your clogs.

Help when retiring – your advice options

We can’t stress enough that this is a good time to be getting personalised, professional financial  advice. Your pension pot has to last a looooong time. Nevertheless, if you are determined to do it alone, there are places and people that can help you. Be aware that this can be a time when you’ll be targeted by scammers. You should be very wary of anyone you don’t know approaching you directly about your options at retirement. And please beware of exotic sounding schemes promising ‘guaranteed’ returns of about 10% a year. No such thing as a free lunch.

Your employer should be able to give you some guidance on your options if you have invested through a workplace scheme. So bother HR. Failing that, the government-sponsored Pensions Advisory service is pretty good and staffed by people who know their stuff. You can call them, book an appointment and ask questions and they get reasonable satisfaction scores for their service. Just be aware they they are not regulated financial advisers and they can only give generic content, and not answer questions like “which pension provider is the best?”  They’ll explain your options but wont tell you point blank what to do. You can also get ‘Pensions Wise’ appointments at Citizens Advice.

Finally, the pensions providers themselves usually do an OK job of providing impartial advice on pensions options. They are certainly a lot better than they used to be. It is certainly worth calling up the company that holds your pension and asking what you can do next. You can take any product suggestions with a pinch of salt but they are so heavily regulated that they will tend to avoid giving you specific suggestions anyway. It’s a useful starting point.

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