Many people never (or rarely) check their pension. Even if you’re among the most diligent, you may not get much beyond the “projected income” headline figure.
Of course, this is important, but there will be other useful information about annual returns that is worth checking out.
And if you have an online login, you can make adjustments on the fly that could improve your chances of a comfortable retirement.
That’s why we’ve put together a practical guide on how to check that your working fund is up to date, so you can take advantage of even a brief visit to an online pension account.
How to write a pension check: what to focus on when logging into your account
Around 16 per cent of retirement savers have never reviewed their pensions and 24 per cent do so less than once a year, according to research from financial services provider People’s Partnership.
By comparison, 20 percent do it once a year and 11 percent do it every six months, according to the survey of about 1,000 pension savers.
Nine per cent of men surveyed said they checked their pensions once a week or more, as did 1 per cent of women.
“Many workers are not prepared for retirement, which is worrying given that we know millions of workers are not saving enough,” says Kevin Martin, group director of client services at People’s Partnership.
“There are simple steps a person can take to ensure they are better prepared for retirement, including registering for an online pension account, naming a beneficiary and making sure their details are up to date so their provider can stay in touch.” .
1. Check your work pension online
This may seem like a no-brainer, but the survey above shows how many people never bother to do it.
If you receive a letter every year and this provides enough information to keep a general eye on things, that might be fine when retirement is many years away.
What is the difference between defined contribution and final salary pensions?
Defined contribution Pensions take contributions from both the employer and employee and invest them to provide a reserve of money at retirement.
Unless you work in the public sector, they have now mostly replaced the more generous gold-plated ones. defined benefit – or final salary – pensions, which provide a guaranteed income after retirement until death.
Much of the information mentioned in this guide is worth checking or updating, regardless of what type of pension you have.
But it is especially important to monitor defined contribution pensions, because savers bear all the investment risk, not employers.
However, pension providers have many tools to check if you are on track and, if you are in a defined contribution scheme, you may want to change how much you contribute each month and how your pension is invested.
When it comes to reviewing mutual funds, you can research fees, risk levels, and performance to see if you can do better.
‘Signing up for an online pension account with your pension provider is a simple process, as usually all you need is your national insurance number, as well as your unique customer number, which you can find in the information pack that they sent you when you joined. your pension provider,” says Mr Martin.
‘Once up and running, you can check the value of your pension fund, change the date you want to retire and change your address if you move house and much more, including changing how your pension savings are invested or transferring other pensions. .’
2. Check your pension income projection
This will only be an estimate, but when added to the projections of other pensions and their state pension provision, It will give you a general idea of what your total income could be in retirement with today’s money.
Compare this figure to your current salary, keeping in mind that some everyday costs, such as mortgage and travel expenses, may no longer be part of your budget when you are older.
An influential measure from industry group the Life Savings and Pensions Association suggests what income single people and couples might need for a basic, moderate and comfortable retirement.
Your calculations do not include housing costs, which you will need to take into account if they continue to be an issue.
The income amount shown online or on your annual return will give you an idea of how much an individual pension will be worth on the specified retirement date if you maintain the same level of savings, Martin says.
‘Always remember that this indicative figure is subject to the return on investment. The statement gives you an idea of how much that could bring you in terms of annual income.’
The pension income you can earn in retirement is not set in stone and will be affected by factors such as how much you save between now and retirement, says Aviva’s head of savings and retirement, Alistair McQueen.
He suggests using one of the many free pension calculators available online to estimate your potential income in retirement, although this amount is only a guide and is not guaranteed.
‘Is your projected income sufficient? A very common and understandable pension question is “how much money will I need in retirement?” The complicated reality is that the answer to this question will be different for each person,” says McQueen.
Three ways to get your pension on track
Alistair McQueen, head of savings and retirement at Aviva, has three “rules of thumb” he gives to people who want a decent pension in old age.
government of forty years
Start saving at least 40 years before your planned retirement age.
Twelve percent rule
Save at least 12 per cent of your income into your pension, and this can include money from your employer.
ten times rule
Accumulate at least ten times your annual income in your pension funds when you reach retirement.
«A very simple rule of thumb is to aim for an income during retirement equivalent to at least half of what you have earned during your working life.
‘We are likely to be able to cover our needs in retirement on a lower income because, for example, we will not have work-related expenses, we may have paid off our mortgage and we will not pay any national insurance on our pension income.’
Check out the pension increases you can get for free here, including more tax relief and extra money from your employer.
3. Make sure personal data is up to date
“Pension providers will keep in touch with you regularly about your pension savings by post or digitally, so it is vital that they have your up-to-date contact details such as home address, telephone number and email address,” it says. Martin.
“All of these can be easily updated in your online account.”
4. Add or change the name of your beneficiary
Decide who you want to benefit from your pension if you die, or change the name if your personal circumstances have changed, for example if you have gotten married or divorced.
“It is very important that your pension provider knows who you would like to benefit in the event of your death,” says Martin.
‘Without this information, the person you wish to benefit may not benefit and it will take a long time to make the payment. You can add or change your beneficiary through your online account or by contacting your provider.’
5. Locate your old pensions
You may have left a trail of pensions behind you after changing jobs, so you’ll need to be aware of where they all are and make sure providers have your up-to-date contact details.
It’s a good idea to carry out similar checks as above on both old and current pots, especially if you saved substantial sums on them while working with a previous employer.
Consider merging your old pensions, although doing so will not always be to your advantage.
‘It is estimated that there are up to 2.8 million missing pension funds in the UK. Check old paperwork or payslips to see who the provider was for the pensions you had previously saved into,” says Martin.
‘If you don’t remember and can’t find their contact details, try the Government pension tracking service.‘
What else should you know about your pensions…?
Some links in this article may be affiliate links. If you click on them, we may earn a small commission. That helps us fund This Is Money and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.