399 lines
13 KiB
Plaintext
Executable File
399 lines
13 KiB
Plaintext
Executable File
finance
|
|
personalfinance
|
|
pensions
|
|
8129905
|
|
-----
|
|
# Clock ticks down on pension dreams
|
|
|
|
## Only a quarter of fiftysomethings are financially prepared for retirement,
|
|
but there are steps you can take to catch up.
|
|
|
|
![Cartoon of couple planning pension][1]
|
|
|
|
Photo: IAN WHADCOCK
|
|
|
|
[![Emma Simon][2]][3]
|
|
|
|
By [Emma Simon][4] 7:01AM GMT 13 Nov 2010
|
|
|
|
[Comments][5]
|
|
|
|
Millions of baby boomers now have just a 10-year period in which they can
|
|
either make or break their retirement plans.
|
|
|
|
According to new research, seen exclusively by _The Sunday Telegraph,_ only
|
|
one in four fiftysomethings is financially prepared for retirement and one
|
|
third have no retirement savings at all. But it is the steps you take in the
|
|
final countdown to retirement that can have the most significant effect on the
|
|
size of your eventual pension.
|
|
|
|
Pension planning has always been particularly important for those in their
|
|
fifties, but today's fiftysomethings face a series of challenges that no other
|
|
generation has faced. The research, by US-based insurer MetLife, points out
|
|
that those in this group have benefited from huge improvements in health and
|
|
longevity: men retiring at 65 can now expect to live to 82, while women of the
|
|
same age can expect to celebrate their 85th birthday.
|
|
|
|
Less positively though, many have seen their pensions and savings squeezed
|
|
from all sides: company pension schemes have cut back while the value of the
|
|
state pension has fallen.
|
|
|
|
But it is private savings that have been hardest hit: those in this age group
|
|
have suffered a toxic mix of poor investment returns, rock-bottom interest
|
|
rates and ever-declining annuity rates, so even those who manage to build a
|
|
decent pension fund find that it secures a smaller income in retirement.
|
|
MetLife's survey showed that those in their fifties were on average hoping to
|
|
retire on an income of £18,100 a year.
|
|
|
|
## Related Articles
|
|
|
|
* [Get a tax-free return on your savings of 16pc][6]
|
|
|
|
19 Nov 2010
|
|
|
|
* [Third of workers over 50 have no pension pot][7]
|
|
|
|
15 Nov 2010
|
|
|
|
* [Serps: game of chance on a pensions promise][8]
|
|
|
|
10 Nov 2010
|
|
|
|
* [Pensions 'devastated by low interest rates'][9]
|
|
|
|
15 Nov 2010
|
|
|
|
* [Pensioners more than 700 worse off a year][10]
|
|
|
|
11 Nov 2010
|
|
|
|
* [BT pension deficit falls 2.9bn on CPI inflation link change][11]
|
|
|
|
05 Nov 2010
|
|
|
|
But six out of 10 of those surveyed said their pension plans had been affected
|
|
by the recent financial crisis. This problem was particularly acute for those
|
|
on middle incomes (of between £50,000 and £70,000) and the nearer you were to
|
|
retirement the more detrimental the effect on a person's retirement plans.
|
|
Women were also particularly ill prepared for retirement, having on average
|
|
half the pension savings of men.
|
|
|
|
Despite these financial problems the majority of those surveyed (60pc) said
|
|
they had taken no action to change their investment strategy, alter their
|
|
retirement plans or protect their pension funds.
|
|
|
|
But there are steps that people can take to improve their pension prospects.
|
|
Ignoring the problem completely is likely to make it significantly worse.
|
|
|
|
Peter Carter of MetLife said: "Sadly, the experience of the last two years
|
|
shows that even those who have done all the right things have still been left
|
|
struggling. Planning for retirement is one of the biggest financial challenges
|
|
people face, and the one you can least afford to get wrong."
|
|
|
|
Below is our countdown to retirement, which, whether you are 10 years or five
|
|
years away, should help you get your pension planning back on track.
|
|
|
|
### 10 YEARS TO GO
|
|
|
|
- Find out what you are worth
|
|
|
|
Before you can draw up financial plans for the future, you need a clear view
|
|
of your current position. Ian Price of St James's Place, the fund manager,
|
|
said that as a starting point people should establish what their likely state
|
|
pension entitlement would be. This can be done by completing a form BR19,
|
|
available at www.direct.gov.uk You should also contact the pension trustees of
|
|
your current and previous employers, who will be able to provide pension
|
|
forecasts, as will the companies managing any private pension plans.
|
|
|
|
- How much money will you need?
|
|
|
|
Gavin Haynes of Whitechurch Securities said you needed to look at how much
|
|
income you would need in retirement. Be realistic - you may spend less if you
|
|
are not commuting to work, for example - but don't forget to factor in
|
|
holidays, travel and any debts you may still have.
|
|
|
|
- Seek advice on how to bridge the gap
|
|
|
|
The chances are that what you are currently on target to receive is less than
|
|
you'd ideally like. Seek advice about how you can bridge this gap. You need to
|
|
maximise savings during this 10-year period - not only into pensions but into
|
|
other investments such as Isas. You will need to consider whether options such
|
|
as retiring later or working part-time beyond your retirement date may be a
|
|
more realistic way of meeting your retirement goals.
|
|
|
|
- Review your investment strategy
|
|
|
|
It is not only how much you save but where it is invested that can make a
|
|
difference.
|
|
|
|
A spokesman for Origen, the pensions specialist, said: "Use this opportunity
|
|
to carry out an audit of existing pension plans; look at where they are
|
|
invested, how they have performed and what charges are levied on them. Don't
|
|
forget to ask whether there are guarantees on any plans."
|
|
|
|
Get advice about whether it makes sense to consolidate existing pension plans
|
|
- perhaps via a Sipp (self-invested personal pension) - or take steps to
|
|
protect capital values. There are a number of guaranteed products that can
|
|
help you achieve this, but seek advice as many come with higher charges.
|
|
|
|
As part of your review, look at the diversification of your assets, as this
|
|
can help protect against sudden market movements. With a 10-year time frame
|
|
investors need to weigh up the risks of equity investments against safer cash-
|
|
based products.
|
|
|
|
Generally, the nearer to drawing your pension you are, the less investment
|
|
risk you should take. But over this period it is reasonable to include
|
|
equities within a mixed portfolio, particularly given the very low returns
|
|
currently available on cash.
|
|
|
|
Bonds, gilts and some structured products may provide a halfway house between
|
|
cash and equities - but seek advice about costs and risks.
|
|
|
|
### FIVE YEARS TO GO
|
|
|
|
- Review retirement goals
|
|
|
|
Get up-to-date pension forecasts and review your retirement plans. Is retiring
|
|
at the age you planned still realistic and achievable?
|
|
|
|
- Take the safer option
|
|
|
|
Consider moving stock market-based investments into safer options such as
|
|
cash, bonds or gilts. If there is a sudden market correction now, you may have
|
|
insufficient time to make good any losses.
|
|
|
|
- Trace 'lost' pensions and other investments
|
|
|
|
If you've lost details of a pension scheme and need help contacting the
|
|
provider, the Pension Tracing Service (0845 6002 537) may be able to help. It
|
|
has access to information on over 200,000 schemes.
|
|
|
|
The tracing service will use this database, free of charge, to search for your
|
|
scheme and may be able to provide you with current contact details. Use this
|
|
information to contact the pension provider and find out if you have any
|
|
pension entitlement.
|
|
|
|
- Maximise savings
|
|
|
|
You now have just 60 pay packets left until you retire. Save what you can via
|
|
pensions, Isas and other investments. This, with your current pension pot,
|
|
will have to produce enough for you to live off for 20 years.
|
|
|
|
Mr Price said: "Don't forget to consider a spouse's pension. If you have
|
|
maximised your pension contributions it is also possible to contribute into a
|
|
partner's pension plan."
|
|
|
|
He pointed out that higher earners and those in final salary schemes should
|
|
ensure any additional pension savings didn't breach the lifetime allowance
|
|
(£1.5m from April 2012) as this could land them with a tax bill. Those with
|
|
outstanding debts, such as a mortgage or credit cards, should use spare cash
|
|
to reduce them.
|
|
|
|
- Consider your retirement options
|
|
|
|
Don't leave it until the last minute to decide what you will do with your
|
|
pension plan. Many people fail to consider their options properly and simply
|
|
buy the annuity offered by their pension provider. This can significantly
|
|
reduce their income in retirement and there is no second chance to make a
|
|
better decision.
|
|
|
|
There are now many more retirement alternatives, from investment-linked and
|
|
flexible annuities to phased retirement options, as well as the conventional
|
|
annuities and income drawdown plans. It is worth investigating which is most
|
|
likely to suit your circumstances.
|
|
|
|
### SIX MONTHS TO GO
|
|
|
|
- Seek annuity advice
|
|
|
|
Talk to an adviser about your options; if you are buying an annuity, make sure
|
|
you shop around for the best rate. Remember that those who smoke or have
|
|
health problems, even minor ones, should inform the annuity provider as they
|
|
are likely to get a better rate to reflect their reduced life expectancy.
|
|
|
|
- Consider deferring retirement
|
|
|
|
You may qualify for a bigger pension if you defer taking it. If you opt to do
|
|
this you need to contact the Pensions Service. Those who work beyond their
|
|
retirement age do not have to make National Insurance contributions. Any
|
|
additional money earned can still be saved in a pension plan.
|
|
|
|
- Contact pension providers
|
|
|
|
Ask how your pension will be paid - and how much it is worth. If you are
|
|
deferring retirement they will need to be informed.
|
|
|
|
[X][12] Share & bookmark
|
|
|
|
Delicious Facebook Google Messenger Reddit Twitter
|
|
|
|
Digg Fark LinkedIn Google Buzz StumbleUpon Y! Buzz
|
|
|
|
[What are these?][13]
|
|
|
|
* Share: [Share][12] [ ][14] [ ][15]
|
|
|
|
[Tweet][16]
|
|
|
|
http://www.telegraph.co.uk/finance/personalfinance/pensions/8129905/Clock-
|
|
ticks-down-on-pension-dreams.html
|
|
|
|
Telegraph
|
|
|
|
## [Pensions][17]
|
|
|
|
* ### [Finance »][18]
|
|
|
|
* ### [Personal Finance »][19]
|
|
|
|
* ### [Emma Simon »][3]
|
|
|
|
[![pensions-calculator][20]][21]
|
|
|
|
### [Pensions Calculator][21]
|
|
|
|
[![find an independent financial advisor][22]][23]
|
|
|
|
### [Find an Independent financial adviser][23]
|
|
|
|
Related Partners
|
|
|
|
* [Telegraph Retirement Services][24]
|
|
|
|
In finance
|
|
|
|
[![Cartoon of couple planning pension][25] ][26]
|
|
|
|
### [Clock ticks down on pension dreams][26]
|
|
|
|
[![New state pension to be unveiled][27] ][28]
|
|
|
|
### [State pension: Q&A][28]
|
|
|
|
[![Composite of gas ring, shower, electricity meter and woman on phone - Five
|
|
money-saving tips for pensioners][29] ][30]
|
|
|
|
### [Five money-saving tips for pensioners][30]
|
|
|
|
[![equity-release-guide][31]][32]
|
|
|
|
### [The Daily Telegraph Guide to Equity Release][32]
|
|
|
|
[X][12] Share & bookmark
|
|
|
|
Delicious Facebook Google Messenger Reddit Twitter
|
|
|
|
Digg Fark LinkedIn Google Buzz StumbleUpon Y! Buzz
|
|
|
|
[What are these?][13]
|
|
|
|
Share:
|
|
|
|
* [ ][12]
|
|
|
|
* [ ][14]
|
|
|
|
* [ ][15]
|
|
|
|
* [Tweet][16]
|
|
|
|
* Advertisement
|
|
|
|
![][33]
|
|
|
|
telegraphuk
|
|
|
|
Please enable JavaScript to view the [comments powered by Disqus.][34] [blog
|
|
comments powered by Disqus][35]
|
|
|
|
[![Retirement services][36]][37]
|
|
|
|
Advertisement
|
|
|
|
[TELEGRAPH RETIREMENT SERVICES »][38]
|
|
|
|
### [Thinking about retirement?][17]
|
|
|
|
**[1. Pensions Calculator][39]**
|
|
|
|
> <b><a target="_blank" href="http:/telegraph.aegondirect.co.uk/retirement-
|
|
income/retirement-calculators/pension-
|
|
calculator?utm_source=tmg&utm_medium=box2&utm_campaign=retirement">2[.
|
|
Retirement options explained][40]**
|
|
|
|
> <b><a target="_blank" href="http:/telegraph.aegondirect.co.uk/retirement-
|
|
income/retirement-
|
|
options?utm_source=tmg&utm_medium=box4&utm_campaign=retirement">3[. How much
|
|
income do you need?][41]**
|
|
|
|
> <b><a target="_blank" href="http:/telegraph.aegondirect.co.uk/retirement-
|
|
income/thinking-about-retiring/planning-your-
|
|
income?utm_source=tmg&utm_medium=box5&utm_campaign=retirement">4[. What is an
|
|
annuity?][42]**
|
|
|
|
[Telegraph Offers »][43]
|
|
|
|
Loading
|
|
|
|
sponsored features
|
|
|
|
Loading
|
|
|
|
Personal Finance Most Viewed
|
|
|
|
* TODAY
|
|
|
|
* PAST WEEK
|
|
|
|
* PAST MONTH
|
|
|
|
1. [Standard tariffs costing energy customers 2bn a year][44]
|
|
|
|
2. [Can we gain in static markets?][45]
|
|
|
|
3. [How to bag a bargain in a flash][46]
|
|
|
|
4. [Why FTSE 100 investors should beware the `hippo market`][47]
|
|
|
|
5. [Insurers call for Government to end carnage among young drivers][48]
|
|
|
|
1. [UK’s ostrich generation: millions of Britons risk pension
|
|
poverty][49]
|
|
|
|
2. [How to find out if you â or your family â helped give £400m to good
|
|
causes today][50]
|
|
|
|
3. [Never mind naming Ryan Giggs, now for the real secrecy scandal][51]
|
|
|
|
4. [Home buyers to spend half of take-home pay on mortgage][52]
|
|
|
|
5. [10 tips to make your money grow â whatever the economic weather][53]
|
|
|
|
1. [A tax-based alternative to the Alternative Vote][54]
|
|
|
|
2. [Sunday Times Rich List 2011: Fortunes of super-rich soar][55]
|
|
|
|
3. [George Soros sells his gold][56]
|
|
|
|
4. [UK’s ostrich generation: millions of Britons risk pension
|
|
poverty][49]
|
|
|
|
5. [Nationwide launches 'honeytrap' mortgage as house prices fall][57]
|
|
|
|
## [best sellers »][58]
|
|
|
|
Advertisement
|
|
|
|
Classified Advertising
|
|
|
|
* [Property][59]
|
|
|
|
* [Fine Arts][60]
|
|
|
|
* [Shopping][61]
|
|
|
|
Loading
|
|
|
|
var puffs_8120648 = new Array();
|
|
|