5 Pension Mistakes To Avoid.



Posted on: 23rd October 2014

A pension isn’t going to nurture and protect itself. With the average pension pot just over £35,000 and most of us looking to generate at least 10k a year and more, we all need to be vigilant on pension policies to make sure we’ve got enough in the pot when the time comes.

To help make sure your savings are right for you, here are 5 top pension don’ts:

Thinking Your Home Is Your Pension.

A lot of people see their home as the only pension they need. But we all need somewhere to live. And you will really only get money from a property if you sell it and trade down for the end of your life. And that’s not always an option. It’s about not backing one horse and spreading your options around a bit.

Having No Pension At All.

The State Pension won’t be enough to get you through. Don’t presume that it will. And the state pension age is also rising. Which means here at Haven IFA, we know having a private pension is going to provide real value and tax advantages. Did you know that there is tax relief on a pension? This means for every 80p you save, the government tops it up to £1. Higher-rate taxpayers, meanwhile, get 60p topped up to £1 and additional-rate taxpayers see 50p topped up to £1.

Delaying Your Pension Savings.

How much and how long you invest will determine what you get out. Even if it’s a little amount it’s worth it. In order to take an annual pension income of £10,000 by the age of 65 you need to start saving ASAP. The older you wait, the more money you would need to save each month to do so. Leave it until 25, you would need to save £105 each month. Leave it until 45 and you will have to save £405 a month; and wait until you’re 55, that goes up to £1,100 a month. A Haven IFA expert says: “You need to save a good percentage of your salary to ensure that you have enough for your pension. And a lot of employers match contributions you make to your pension.

Saying No To The Company Pension.

There’s money to be made through company pensions: Companies match employee contributions, so ignoring a company pension scheme simply means you are turning down cash. New regulations mean that all employers will have to add to your contributions. You have the right to opt out, but will be re-enrolled if you change company.

Forgetting To Review Your Pension.

It’s a common mistake that people make. They have a pension, but they don’t know how much it’s worth, what’s involved or what the risks are. Just make sure everything is OK once in a while. Our financial team at Haven IFA will be more than happy to help.

Check our blog for more about new pension rules and how to plan ahead for retirement.