While we may have given up on hot days and balmy nights, we mustn’t give up on our financial goals and now is the time for a review.
Given their very generous taxation treatment, most people have some pension provision in place, either through their employers or via personal arrangements. These may be current and being paid into or they may be old and just ‘ticking along.’ It is vital that these policies, old or new, are scrutinised in three key areas: 1) Risk, 2) Performance and 3) Charges.
Most pension plans have a choice of investment funds and these will typically fall into one of the following asset classes: cash, fixed-interest, UK equities, global equities and property. Holding these in the correct percentages, based on your attitude to risk, capacity for loss and market conditions is vital if you are hoping to get a decent return on your investment and to not be exposed to the wrong level of market volatility, particularly in later life.
Once any ‘risk’ anomalies have been addressed, you should then scrutinise the ‘performance’ of the appropriate funds that are available through your pension provider. While fund selection on the basis of performance alone is fraught with danger, as there are many other important factors including consistency and financial stability, holding a fund that is not at the races over a fair period of time can seriously affect your fund size at retirement.
Excessive policy and fund charges that aren’t delivering excessive performance also can also eat into you retirement plans. By getting your advisor to investigate the charges that your pensions are subjected to could save vital percentages which could in turn translate itself into thousands of pounds extra for you over a lifetime. So, before Jack Frost starts to visit and the morning ritual of hand-clapping and windscreen scraping fully commences, pull all your pension paperwork together and book a review with your advisor. Please remember that pension funds can fall as well as rise in value and that you may not get back what you have paid into them.