I had no real idea what my future looked like. And was honestly a bit scared to even look. But I’m really glad I did now…
Almost half of us don’t know how much our pension income will be, according to Aviva research. And until recently, neither did I. The thought of finding out was tedious and terrifying in equal measure.
Tedious, because I have several pensions to consider and it’s ‘admin’.
Terrifying, because I was, frankly, scared I’d discover I might not have enough to live on.
But as I approached 55, when we are able to access pension pot(s), I read about the free government pension advice service, and decided to book a Pension Wise appointment. Its website [www.pensionwise.gov.uk] has heaps of advice and info, but over-50s can book a free appointment to discuss pension options. So I did.
Why am I interested now?
What sparked this healthy interest in my financial future was my partner’s early retirement from the NHS (good pension: another reason to bless the NHS). He bought a motorhome and we began heading off in it. Still working full-time, I was envious of his free time (he did return to work part-time), and daydreamed about how I’d like to work less. When – and if – I could retire.
Before the appointment
An email details the information you need. First was checking my state pension. For the full £175.20 a week, you need 35 years’ full National Insurance contributions. Check yours here: www.gov.uk/check-state-pension or call 0800 731 0175.
Next was investigating the value of my pension pots. I’d had a ring binder labelled ‘pensions’ for a while, but hadn’t really read anything I’d stuffed inside. I opened it, covering the floor in papers, then created a spreadsheet including company, website login, total fund amount, start date and type.
My other personal pension was set to pay out from age 55, thanks to my super-optimistic 26-year-old self, who believed I’d be able to afford to retire then
I took out my first pension in my early 20s, when my then-partner’s financially unsavvy father, who paid weekly life insurance to ‘the man from the Pru’, suggested I get one of these new Personal Pension Plans… Thanks, Gordon; that’s my biggest ‘pot’, and starts at age 60.
My other personal pension was set to pay out from age 55, thanks to my super-optimistic 26-year-old self, who believed I’d be able to afford to retire then! Three employers’ schemes start at 65 and my state pension at 67.
My email also asked me to think about other income and debt, when I want to retire, and whether I want fixed or variable retirement income.
Pension Wise offers guidance on how best to use your money, tax, how to compare products, get financial advice and avoid scams. It’s not advice on where and what to invest in. For that, you need a financial adviser.
At the appointment
I worried that Philip, my adviser, would baffle me with financial jargon but his advice was perfectly pitched. Appointments are by phone at the moment, but you’ll still get your hour.
During my hour, the main subject was the six things you can do with a pension fund:
- Leave it untouched, ie, earning interest while you carry on working, beyond your original chosen retirement age
- Get an annuity (an insurance policy that gives you guaranteed, taxable income for life)
- Get an adjustable income, where you take up to 25% of your pot and the rest is invested to give regular, taxable income
- Take cash in chunks until the money runs out. The first 25% of any amount is tax free; the rest is taxed
Mix it up, eg use some of your pot to buy an annuity and some for adjustable income
Philip suggested we should check whether my partner was named as beneficiary if I died, on any plans taken out before we met. That was really useful.
I brought up the idea of taking a couple of thousand out of my pension, to fund an extended trip abroad. Philip asked if I had savings, and suggested I use those, as money in a pension will be worth more in the long term.
There was no judgement or criticism of my (lack of) financial planning or absence of current contributions to any pension, or statements that were out of date. Philip answered my questions, totted up my pots and confirmed that my retirement income would be ‘OK’.
After the appointment
Phew! I felt as though a weight had been lifted. With a better grasp of my own pension situation and pensions in general, and relieved, because my pension income is ’OK’. That’s a huge relief. But if it hadn’t been ‘OK’ this would have been the wake-up call I needed to sort things out.
As I’m freelance and largely self-employed, I envisage that I’ll carry on working, latterly scaling back my hours. I plan to go for a mixture of fixed and variable income.
They emailed me a summary of what was discussed, to download or print. It’s easy to understand and there’s more help on the Pension Wise website. If you’re in any doubt about your pension and what you can look forward to, it’s absolutely worth grasping the nettle and finding out! And one of those ways is to book a Pension Wise appointment.
Book your own Pension Wise appointment
Currently there are no face-to-face appointments available, but you can make a phone appointment here [www.pensionwise.gov.uk/en/book-phone] or by calling 0800 138 3944.