With many ways to save for later life, such as pensions and individual savings accounts (ISAs), it can be easy to assume we’re saving enough and forget to check in on our progress. In this guide, we’ll help you discover ways to stay on track with your long-term savings.
How to do a pension health check
A pension health check is a regular review of your pensions, which you can do yourself or with the help of a financial adviser if you have one.
Checking in on your pension regularly is important to keep you on track to achieve your saving goals. This may help you feel more secure in planning for your future.
Here are some tips on what you could include in your pension health check:
- First, make sure you know where all your pensions are as well as their details. You can use the Pension Tracing Service if you've lost previous pensions.
- Use MoneyHelper's pension calculator to see how much pension income you’re likely to get at retirement.
- Make sure you know what funds your pension is invested in and keep an eye on how they’re performing.
- Review your pension at least once a year to make sure you’re on course to provide the savings you need for life beyond work.
Think about all the savings you may put towards your retirement, not just your pension. Savings accounts like ISAs can be used to save for anything, including retirement, so they’re useful alongside a pension.
Do you know where your pension pots are?
If you move jobs over the course of your career, it’s likely you’ll have multiple pension pots with different pension providers. To perform a pensions health check, you need to make sure you have access to all your pension pots, including any workplace or personal pensions, and keep track of them over time. This is important to help you work out exactly how much you’ve saved and if you’re on target to reach your savings goals.
If you have a workplace pension, your employer will pay into it too, and this could make a big contribution to your retirement savings over time. Employer contributions are added on top of any contributions you make, as well as tax relief from the government. Just like with other pensions, the government will pay tax relief on contributions put into a pension. However, if you don’t pay tax, you might not get tax relief.
For most people, who pay the basic rate of tax, tax relief works by adding money into your pension that’s equivalent to the amount of tax you would have paid on each pension contribution. Instead of taking money as tax, the government pays tax relief to encourage people to save for the long-term. There are generally two ways you may get tax relief, relief at source and net pay. You can find out more about these at MoneyHelper.
To help you keep track of your pension pots, there are some simple things you can do:
1. Activate your online pension account
It’s likely that your workplace pension provider offers simple ways to manage your contributions and monitor your pension’s investment performance online or via an app.
When you join a new pension scheme, activate your online account so you can check your pension as often as you like. Remember, the value of your investments can fall as well as rise. Pensions are a long-term investment, so it’s not unusual for the value of savings to fluctuate over the term of your investment.
Accessing your pension online may also give you the opportunity to increase your monthly contributions, make ad-hoc payments, or opt into a salary sacrifice arrangement if your employer offers this.
Pension forecast calculators can also help by giving you an idea of how your money might perform over time. Try this pension calculator from MoneyHelper.
2. Keep your details up to date
Make sure you keep your personal details up to date, so your pension provider can get in touch. Pension statements are often sent out via post each year, or sometimes by email. So, if you move house or change email addresses, it’s important to update these within your pension accounts so that you continue to receive important communications.
This will help you know the total amount you have saved across your pension pots. It will also save you time in the future as you won’t have to spend time tracing lost pensions.
3. Trace a lost pension
If you think you have lost details of an old pension, the first point of contact should be your previous pension provider. If you can’t find their details, you can use the Department for Work and Pensions’ (DWP) pension tracing service online.
The value of lost pension pots might add up to more than you think. For more information, visit our page on How to find a lost pension.
4. Consider combining your pensions
You can have oversight of all your pension savings in one place by bringing them together. Combining your pension pots could have several benefits. You may find it easier to view and manage your pension if it’s all in one place. You may also benefit from having only one set of charges, instead of charges for each account you have. However, this doesn’t mean that the overall charge will be cheaper.
Combining a pension may not always be the best option for you. You may lose features, protections, guarantees or other benefits – so make sure you compare products before combining. Any new funds you move your money into will have their own set of risks that will be detailed in the fund information.
It’s up to you to decide if bringing your pensions together is the right decision for you. If you’re not sure, speak to a financial adviser. You can find an adviser on MoneyHelper. There’s likely to be a cost for advice.
