Should I invest more in my workplace pension?
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I have decided I want to put a bit extra into my pension fund. I’m in my late fifties so have about 10 years to go before I retire, but have only ever put the basic amount into my work fund so far and I’m worried that it won’t be enough. My work scheme delivers good returns, so should I put the extra money in there or in a separate scheme?
Phil Beck of Smith & Pinching responds:
I can’t say where you should invest your additional contribution without knowing a great deal more about you, your workplace scheme and your retirement objectives. It all depends on a combination of factors.
Workplace schemes vary hugely in their flexibility and investment opportunities. If, for example, you were a member of a “NEST” scheme – the basic scheme provided by the government – then your opportunities and options may be limited, whereas a full workplace scheme with one of the big providers may offer you a range of investment choices and flexibility in your contributions.
Another factor to take into account is the charging structure of your workplace scheme, particularly in respect of additional contributions. We would need to see if that is competitive within the pensions marketplace.
My recommendation would be for you to take this opportunity to do some wide-ranging independent financial planning. These last 10 years or so before you retire will be critical in getting you to where you want to be when you finally stop earning, so it’s important that you understand what you need to do to get you to a point to achieve your desired retirement lifestyle.
We use lifetime cashflow planning tools to demonstrate the growth of your fund under different growth and contribution scenarios and to show you how your pension fund might grow over the intervening years and what income it might deliver.
Any opinions expressed do not constitute advice. The value of your investment can go down as well as up and you may get back less than the amount invested. 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