7 surprising facts about pensions most people don’t know

Retired elderly couple dancing in the kitchen of their home

A pension expert can offer advice on where to invest your retirement savings and help you create an affordable contributions plan to put aside more for the future, so you can enjoy your later years. - Credit: Getty Images/iStockphoto

In a revealing conversation with Joe Chillingworth, a financial planner from J Edward Sellars in Clevedon, we discover some lesser-known facts that could make a big difference to your retirement savings.

Below, he shares seven need-to-know facts about pensions and explains what help is available for NHS workers currently facing a reduction to their pension scheme.

1. Consolidating your pension pots can make tracking your savings easier

Most people have more than one pension from jobs they’ve worked throughout their life, though it’s common for people to lose track of them over the years. You can log on to the government website to help you trace a lost pension. We can offer advice to help you merge your pensions into one pot, which can make retirement planning much simpler and easier to manage.

2. Changing your existing pension scheme could help you save money

Not all pensions follow the same rules. I often advise clients to learn more about their current pension charges, as switching funds could help you lower your annual fees.

Pension planning and retirement savings advice from J Edwards Sellars in Clevedon.

You can consider opening a personal pension and could receive tax relief on your contributions, helping you to save more for your retirement. - Credit: Getty Images/iStockphoto

You can also choose when your retirement savings are invested. Pensions investments can vary in risk, which is why speaking with a financial professional can be beneficial. They can offer advice on where to place your money to best suit your goals.

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If you have an older pension, this could mean you don’t have access to all pension freedoms. Speaking with a pension expert sooner rather than later can help you understand how you can access your money when reaching retirement age.

3. Even if you have a workplace scheme, you can set up a personal pension

Most people are auto-enrolled into a workplace pension, however, this will only make minimum contributions. You can consider setting up a personal pension to help boost your income during retirement. We can help you explore suitable pension products and put an affordable savings plan in place to provide better financial security for your family in the future.

4. You can get tax relief on your personal pension contributions

Another benefit of paying into your own pension is that you’re entitled to tax relief on the contributions. For example, if you paid £100 into your pension, the government would top that up by £25, meaning more money is going towards your retirement, at no additional cost. The amount of tax relief you’re entitled to is calculated based on your current tax rate. 

Retired grandfather with young grandchildren

Pensions remain one of the most tax-efficient ways to plan for your retirement and can provided added financial security for you and your family. - Credit: Getty Images/iStockphoto

5. Pension planning isn’t just for the elderly

It’s easy to put off thinking about your pension, however, making decisions now could help you save more in the long run. It’s worth chatting to a financial planner to review your current pension savings and discover if there are some simple ways you could save more.

6. Increases to the minimum pension age could affect your retirement savings plan

From April 2028, the normal minimum pension age will rise from 55 to 57. This could mean you need to review your pension plan to ensure you have enough to live on through your retirement. Consulting a pension adviser can help you to understand legislation changes that could affect your finances, and offer much-needed guidance and reassurance throughout every step of the pension planning process.

7. Seeking professional advice could help NHS workers avoid pension penalties

In March 2020, at the beginning of the Covid-19 pandemic, the government announced a temporary suspension on pension penalties for NHS workers. This enabled nurses and doctors to return to work without suffering a reduction in their pension and to provide much-needed care to patients.

However, as of March 24 2022, the suspension will expire, meaning over 7,000 NHS employees may need to retire earlier than they intended, to avoid losses to their pension. NHS workers are currently being encouraged to decide if they will continue to work after March 25, 2022.

We’re reaching out to NHS staff that may want pension advice to help them decide what’s best for them. We can offer guidance and support to help them manage and improve their pensions and avoid penalties so that they continue in their role.

Pensions remain one of the most tax-efficient ways to plan for your retirement which is why we’re committed to helping individuals and families living in and around Somerset, access the help they need so they can enjoy a comfortable retirement and make the most of the money they’ve worked so hard to attain.

For help with your pension, visit jesellars.co.uk. Contact 01934 875919 or email enquiries@jesellars.co.uk.