Should you be thinking about your pension?
The short answer is ‘yes’!
But if you want a fuller answer, keep read on . . .
Final Salary pensions (or Defined Benefit pensions) are to all intents and purposes a thing of the past for many employees.
These ‘gold-plated’ pensions were devised when things were very different, but over time they have become too costly because:
- Individuals are living longer – meaning that they have to wait longer till they qualify for their State Pension and organisations have to pay out more than they originally assumed would be the case. (https://www.ft.com/content/625e3b48-2c0b-11e7-9ec8-168383da43b7); (http://www.institutionalinvestor.com/article/3715742/investors-pensions/uk-faces-postal-strike-as-pension-battle-heats-up.html)
- The investment performance of Pension funds is unpredictable
- Many corporate pension funds are in deficit and cannot pay out that which pensioners are due (http://www.pionline.com/article/20170509/ONLINE/170509845/uk-corporate-deficits-rise-84-in-april).
Consequently, Defined Benefit schemes are being replaced by:
- Defined Contribution pensions where both employers and employees contribute to the pension pot and its growth is largely determined by investment performance.
- Private Pension schemes.
The upshot of all this is that there are very good pension solutions available, but forward planning is key and you can never start too soon!
Individuals are increasingly seeing the need to take responsibility for their futures, rather than trusting that the government will provide for them in later life.
Quite simply, the more that we commit to our pension savings pot, the more choices we will have in retirement. In other words, if you work for 40 years and then go on to live out your retirement for a further 20 to 30 years, you need to be putting away a reasonable amount so that you will have the means to maintain the kind of lifestyle you desire.
For reasons that are understandable it is questionable whether people are fully equipped to make a series of important decisions about retirement. My clients regularly ask questions like:
- How much money should I be saving now to build up a financial pot for the future?
- If I don’t know the future cost of my healthcare, accommodation and care, how can plan with any confidence?
- I’ve paid into a UK pension and it’s frozen back home; so is there a way of releasing it to grow optimally?
- Although the UK pension system has been recently reformed, providing me with more choices, am I right in thinking that decisions about my future pension arrangements seem to carry greater risk?
- How do I find out what is my pension worth?
- How much is my pension projected to provide me with on a monthly basis when I stop earning a salary?
- How is my pension investment performing and will it provide the kind of retirement lifestyle I’ve always dreamed of?
Help with answering these and a whole host of other questions is on hand from Dubai-based deVere-Acuma, part of the world’s largest independent Financial consultancy. We provide unbiased, professional financial advice to expats who are intentional about their financial health and wellbeing.
So why not contact me today and let’s explore how you can be best prepared to enjoy your retirement!
By Ainsley Stephenson