How long will you be working?

The results of a major pension review are due to be published in May 2017. Experts are already stating that they expect up to 30 million people to have to wait an extra year before receiving a state pension. This means that anyone set to retire after 2028 will have to work longer.

The Daily Telegraph looked at the implications of these potential changes and estimate the plans could save the Treasury's around £240 billion, experts have described this as a "politically painless" way to cut pension spending. Richard Harrington, the pensions minister, has talked about the importance of making the state pension sustainable in light of longer life expectancies.

 

The DWP have now identified two options: make no changes to a formula, which triggers state pension age increases when an average person can be expected to spend a third of their adult life retired. Or, reduce the point in the formula from a third to 32%. Although this sounds a small change it would move the state pension date above 67 years old from 2028, instead of 2039.

Plans for a full state pension review have been circulating since 2013. Richard Harrington summed up the aim as follows: "People are living and working longer than ever before, that is why it is important we get this right to ensure the system stays fair and sustainable for generations to come.

Why Review Your Pension?

An annual review of your pensions is a vital part your retirement planning. With the state pension unlikely to provide enough for the quality of life you'd like, it is vital to ensure that you have sufficient funds in your pension pot to fund an enjoyable retirement.

The first thing a pension review from an adviser will do is help identify all the pensions you have paid into during your working life. With most of us having multiple employers during our careers, it is perhaps unsurprising that there is some £400 million in pension pots currently unclaimed.

Old pensions which are no longer being paid into are referred to as ‘preserved’ pensions. The pension pot should still be growing but its performance may well be less than other schemes. If you have several of these ‘preserved’ pensions it can have a big impact on your final pension pot. 

With all of your pensions identified a pension review will examine key elements of the scheme:

1) What charges and fees you are paying 

2) Recent performance of your pension scheme

3) Long term projectory of your savings 

3) Check how appropriate the pension is for your needs

 Pension review complete your adviser will be able to give you an accurate picture of what you can expect in retirement and compare that with what you could achieve by moving some or all of your savings. Moving funds could also benefit from lower fees and charges and potentially be easier to keep track of. 

The decision to transfer pensions is a major one which can have a major impact on your retirement. We strongly recommend taking advice from an IFA before making any changes.