When markets experience volatility, you may see fluctuations in the value of your pension. These are a normal part of long-term investing, as the value of investments can go down as well as up, so you may not get back the amount you originally invest. This can be daunting, but there are ways you can ease your mind during times of uncertainty.
Read about the changes Read more news Read about the changes tothe Lifestyle investment optionsMoneyHelper has brought together the support and services of three government-backed financial guidance providers (Money Advice Service, The Pensions Advisory Service and PensionWise) making it quicker and easier for you to find the financial help you need.
Visit MoneyHelper for information and support on everyday money management, money troubles, pensions and retirement and more!
From figuring out how much you’ll need to save for retirement, to seeing what changes you can make now to save more for your future, Fidelity have a host of tools available to help you with your retirement planning.
Access important documents such as the expression of wish form or the Annual Report and Accounts in the document library. Fidelity also have lots of useful factsheets and videos on their website.
Darren is 35 and married with two kids. He joined YBS at the age of 24 on a salary of £18,000 and since then has paid 3% of his salary into his pension each month (with the Society now paying in 7% too). He’s just had a promotion and now earns £35,000, but he hasn’t thought of his pension since he automatically joined the Plan over 10 years ago.
Since turning 35, Darren had been thinking about retirement a little more, so he decided to look at his pension savings. After reviewing his savings for the first time, Darren decides it’s time to make some changes...
When reviewing his pension savings, Darren logged onto PlanViewer and was surprised to see that he’d already built up a pot worth £25,000. Fidelity’s ‘MyPlan’ pension modeller showed him that, based on a moderate risk investment style and an average outcome, this pot could be worth around £220,000 if he continued to contribute 3% (with YBS also paying in a further 7%) until he retired at 65. At first, £220,000 in savings sounded like a lot, but the MyPlan modeller told him this could mean only £7,900 per year in retirement, which was a lot less then he thought.
Wanting to make sure he and his wife have a long and comfortable retirement, Darren used Fidelity’s ‘The Power of Small Amounts’ tool to find out what difference an extra 1% could make. Darren was surprised to find out that by paying an extra 1% each month, he could get an additional £36,000 in his pension pot at retirement! Even better, he remembered that if he paid an extra 1%, the Society would also pay an extra 2%. This means that by contributing just 1% more each month, Darren could have an extra £108,000 to enjoy at retirement!
When Darren saw that the extra 1% would cost him less than £24 a month after tax relief (because the money going into a pension isn’t taxed), he decided to make the change on MyBenefits – he also added a note in his diary reminding him to review his savings again at the same time next year in case his situation changed.
Why not visit PlanViewer and see what difference an extra 1% could make to your retirement income too?
Shazma joined YBS in 2012 when she was recruited alongside Jamie (who turned out to be her future husband!). Shazma and Jamie both decided to put 5% into their pension from the start so they could benefit from the Society’s maximum contribution. This means that they’ve had 15%, rising to 16% from 1 January 2016, of the value of their salaries invested in the Plan every year for six years. In reality, this costs them less than 5% of their salary as they pay their contributions through salary sacrifice. With salary sacrifice they get full tax relief and some National Insurance savings by paying into their pension directly before receiving their monthly salary.
Shazma and Jamie currently earn around £30,000 each and have always been paid roughly the same. However, after receiving their pension statements this year, they were in for quite a surprise when they opened them to find that that Jamie’s pot was £7,000 larger than Shazma’s...
When Shazma read her pension statement and saw that her pot was worth £24,000 and Jamie’s was worth £31,000 she was convinced there must have been a mistake.
After ringing Fidelity, she found out that, in 2012, she had decided to invest her money in cash (a low-risk, low growth fund). Shazma vaguely remembered filling out a form when she joined the Plan – she thought low risk was a good idea, as she wanted to keep her money safe. On the other hand, Jamie remembered that he had chosen to invest in a selection of growth funds. As a result of the investment choices they made when they first joined the Plan, Jamie had been enjoying investment returns of 8-10% a year while Shazma’s returns had usually been less than 1% a year.
Disappointed that she hadn’t reviewed her investments sooner, Shazma knew it was time to make some changes. After reading Fidelity’s investment information on PlanViewer and considering their options carefully, both Jamie and Shazma decided to move their investments into the Income Drawdown Lifestyle Fund. This was partly because of its past investment performance, and partly because they felt they were likely to use an income drawdown option at retirement.
As well as updating her investment choices, Shazma decided to increase her contributions to make up for lost time. She also made a resolution to check in on her investment fund’s performance and review her pension choices every year when her pension statement arrived in case her circumstances changed.
When was the last time you reviewed your investment decisions? Visit PlanViewer to make sure your investment choices are right for you and your circumstances – remember to consider your options carefully before making any changes.
