Stuart Murray MBA (finance) FPFS FCSI IMC CertPFS(PTA) - Murray Wealth Management LLP
The Association of British Insurers would suggest the Brits consider it’s more important to insure their sofa than secure their future. In fact, 19.7 million households have contents insurance but only 2.2 million with a personal pension(1).
Ask the average person to talk about their pension and they are likely to make excuses "I’d love to but I’m a bit short for time at the minute" and then lie low until the subject is forgotten.
It’s a bit like talking about death! Inevitable but fraught with emotions most of us just don’t want to face... getting old and a fear not having the money or health to do the things we really enjoy.
The finance world hasn’t done much to help most people understand pensions either. The world is complex enough, we have data overload and the terminology and perceived paperwork is a step too far for most to be bothered about working it all out instead choosing to "live for today".
It’s so easy to ignore your pensions until later life but it’s a sad fact that it could mean missed opportunity for a lot of people and, with the right help understanding and planning your pension is straightforward.
The Financial Conduct Authority revealed that pre-retirees aged 55-64 are the biggest worry; only a quarter of them know what they have in their pension pot(2). So, here’s a few pointers to help you get as comfortable with your pension as you are on your sofa!
"I have a bunch of old company pensions but I’ve no idea where the paperwork is"
There’s no need to find your old paperwork. All that is required is your name, address, date of birth and where you worked or who your policy is with along with a signature giving authority for your adviser to request your pension information, provide pension forecasts and show how these are performing against the rest of the market.
"My old pensions won’t be worth much"
Its amazing the number of people who consider their old pensions are not worth reviewing especially those who have moved around jobs. One of our clients recently said "I hadn’t realised just how much I’d got all over the place. It was really worth the effort and I’m more relaxed about my future now".
"It’s not going to make any difference by the time I’m retired, I’ll be broke anyway"
First of all you need to know how much you need to live off. That way you will know how much income your pension needs to provide. Some suggest that by the age of 50 you should have accumulated six times your salary but it depends on a lot of factors including the age you want to retire. The sooner you work it out the sooner you can plan your future.
How you achieve the necessary income depends on other savings or investments you have, your attitude to risk and investment and various other things like your health and personal circumstances like whether you have a mortgage or other debt.
"I don’t know where to start"
The first step is to find a financial adviser. One who is expert in the pension field who can hold your hand, ask the right questions and take you through the process step by step. Look for a financial adviser who is qualified as a pension specialist, one way to tell is the letters CertPFS(PTA) after their name.
"I can’t afford to see a financial adviser"
Some would suggest you can’t afford NOT to see a financial adviser to plan your future. If you have a bunch of old pension policies, ask a financial adviser to review them to see if they could be working harder for you, the cost of the advice can come from the pension pot itself. The recommendation from your adviser should illustrate the benefit and projected return in comparison to the cost and current performance.
Achieving financial security starts with having the right conversation with the right qualified specialist who, whilst knowledgeable in their field, understands holding your hand and explaining in simple language is key. Securing a comfortable retirement sooner means you can sit back on the sofa and take the weight of worry from your mind.
The value of an investment with St James’s Place will be directly linked to the performance of the funds you select, and the value can therefore go down as well as up. You may get less than you invested.
1. ABI Analysis, Office for National Statistics, Living costs & food survey 2015-2016
2. Financial Conduct Authority, Financial Lives Survey 2017
St. James’s Place guarantees the suitability of the advice given by members of the St. James’s Place Partnership when recommending any of the wealth management products and services available from companies in the Group, more details of which are set out on the Group’s website at www.sjp.co.uk/products.
Murray Wealth Management LLP is an Appointed Representative of and represents only St. James's Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the group's wealth management products and services, more details of which are set out on the group's website www.sjp.co.uk/products. The titles 'Partner' and 'Partner Practice' are marketing terms used to describe St. James's Place representatives.