Let’s be honest, pensions aren’t exactly the kind of topic you’d bring up over brunch. They feel grown-up, maybe even a little boring… until you realise, they’re the key to making your future life comfortable, secure and stress-free. So where do you start? What options are actually available? And how do you know which one’s right for you?
egg sat down with Julie Burgoyne, Senior Independent Financial Adviser and Pension Transfer Specialist at Melville Independent. With more than 30 years in financial services, she’s helped countless people navigate the big money decisions that shape their futures. And she’s here to make pensions a whole lot easier to understand by answering the questions people ask most...
Where should I start with pensions?
A: There are a number of options available when it comes to pensions. Not all options are available to everyone. It depends on your situation. Most people are eligible for The State Pension. It’s based on your National Insurance contributions and will offer a basic income in retirement. Your eligibility and the amount you receive will depend on how long you have worked and contributed.
Tip: You can request an estimate of the amount you’ll receive and check for any gaps. It’s worth doing - the State Pension will provide a guaranteed income throughout your retirement
What’s a Defined Benefit Scheme?
A: Sometimes called a Final Salary Pension, it gives you a guaranteed income in retirement based on your salary and years of service. Not all employers offer these anymore - and those that do may not offer membership to any new members of staff. If you have one, it’s an extremely valuable benefit.
How do Workplace Pensions work?
A: Since auto-enrolment was introduced in October 2012, most employees are automatically signed up for a workplace pension. If you are in employment, it is likely you will be a member of your workplace pension to which you and your employer will both contribute. It is different from a Defined Benefit Scheme as the amount you receive in retirement will depend on the final value of your investments.
What about a Personal Pension?
A: As the name suggests, this is a pension that you set up yourself (not your employer) through an Insurer company or pension provider. You then contribute to this from your bank account and make decisions regarding the investment of the contributions.
Melville Independent can help with any investment decisions and contribution levels. You may be looking to retire with a certain amount of income; our financial advisers can recommend the level of funding required in order to achieve your goal.
How do I decide which pension is right for me?
A: Your starting point will usually be the State Pension. It will provide you with a guaranteed basic income in retirement. From there, you’ll likely need an additional pension to ensure you have enough income in retirement.
- If you’re employed and offered a workplace pension - join it! It means your employer will also be contributing to your pension pot,
- If you’re self-employed, you’ll need to set up a personal pension. You can also use one to top up your existing workplace pension.
What should I look for in a pension plan?
A: If you are a member of your Workplace Pension (Defined Contribution) you need to look at the investment options offered. Which of the options matches your risk tolerance? Do you have access to a good selection of investment options? Will your employer match your contributions, if so, take advantage of this.
When looking at both personal pensions and workplace pensions, it is important to have a full breakdown of charges. The higher the charge, the harder the pension has to work in order to grow.
Does the plan offer flexibility, can you stop, start, reduce or increase contributions. Can you change the investments selected? Our level of risk usually reduces as we get closer to retirement and we may want to switch into a lower risk fund.
When should I start?
A: Now. The sooner you start contributing, the longer your money has to grow. Review your pension regularly to make sure it’s still on track with your goals and performing well.
Your pension might not be exciting, but it’s one of the smartest investments you’ll ever make. The earlier you act, the more freedom and security you’ll have when you retire.
Ready to get started? egg business partner Melville Independent are ready to help. They’ve been assisting clients with wealth management advice and pensions for more than 10 years from their Edinburgh city centre offices on Melville Street. Plus, egg members get a one-off free review of your current financials.
To arrange your free financial audit, email [email protected]
#paidpartnership
