Should I start a new private pension?
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I am in my thirties and belong to my work’s pension scheme. I had a pay rise earlier in the year and am finding that I’m not spending as much as I earn, even with a few holidays and treats. I think it would be a good idea to put more into a pension each month. Do you think I should put it into my work pension – my employer says I can if I want to – or should I start a new private pension?
Douglas Bridges of Smith & Pinching responds:
This is something that I wouldn’t be able to answer without having a proper look at your financial circumstances as it depends on a wide range of factors. In particular, it will depend on what type of scheme your employer has in place. We would need to look at the investment choices on offer, the fees that are being charged, and the options available at retirement.
There is certainly no reason why you shouldn’t run a private pension scheme alongside your workplace scheme and opening a new private scheme is relatively easy to do.
While it is almost always a good idea to save more than the minimum contribution levels set down for workplace pension schemes, this sounds like a good time for you to sit down with an independent financial adviser to put some proper planning in place for your retirement. Planning now will show you how much you need to save to deliver the right levels of income when you retire, or indeed if you have to rethink your retirement goals. As you have excess income, hopefully you can save in an affordable and gradual way between now and your planned retirement date, although this will depend on when you want to retire.
It’s important that you keep your retirement planning under review regularly throughout your working life and make adjustments to your plan as needed to reflect changes both in the performance of your pension investments and in your own circumstances.
Whether you go with your employer’s scheme or open a new private pension scheme, you should make sure that the investments within your fund are right for you. An adviser will help you understand investment risk and will recommend investment choices that are suitable for you.
Any opinions expressed in this article do not constitute advice. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.
For more information, please visit www.smith-pinching.co.uk