Pension advice

When you retire, it’s important to find enough pension funds waiting for you. These funds are accumulated throughout your working years. But, having a good amount of pension funds after retirement isn’t easy. It requires wise management of your savings during your earlier years.  

So, if you think that you are still younger to think about saving for your retirement, don’t. The earlier you start, the more your retirement money will be. However, you may not know about the best saving strategy you can follow for better yields. So, it’s important to have a pension advice by which you make sure that you are on the right track.


In this topic, you will know the importance of pension advice, how it would help you to increase pension, and how pension advisors can help you to achieve your retirement goals.


Why you need for pension advice?

In the past, buying an annuity with your tax-free pension funds after retirement was the most common choice selected by the majority of retirees.  This annuity was offering a guaranteed income for your life after retirement. But, in today’s life, there are a lot of choices from which you can choose to use your pension pot. Some of these choices are difficult to understand by your own. So, finding the right option for yourself is not an easy process.

A professional pension advice will help you to achieve your goals as it will be released after analyzing your life and all possible ways that could be taken to achieve your goals.

If you want to save money that would be paid for a professional pension advice, you can go for guidance services that are provided by the government for free. They are few options that provide general information related to planning you retirement.

  • Pension wise: this service has been provided by the government since the introduction of pension freedoms in 2015. Since then, all people are free to use their pension pots. With this service, you can call a governmental employee who will discuss the available pension options that you can choose from.
  • Pension advisory service: this service is provided by an independent organization supported by the government. You will ask them about all what you need to know regarding pension management.

Free guidance services provide only general information. But if you need more personal pension advice, it is more recommended to hire a pension advisor.


How pension advisors can help?

Paying for a pension advisor is worthy, it will eventually ends with maximizing your pension return as the primary job of a pension advisor is to help clients save better and prepare for their future. Before you decide to pay for an advisor, you will meet him at first to discuss your needs. This meeting is free of charge until you decide to deal with this financial advisor. When you begin, he will ask you a lot of questions related to your financial circumstances and you retirement goals. Then he will match these goals and circumstances to the available options in the market. In fact, there are two types of pension advisors:

  • Restricted advisor: offers options that are provided by a single provider (usually the firm or bank where he works) or limited providers.
  • Independent advisor: not restricted to a number of providers.


How to increase pension?

You pension should work for you at the top possible way in order to yield enough pension funds when you retire. Raising the amount of funds while you are working depends of two major factors, the amount of your pension contribution and the due date when you will claim your pension. The following tips are recommended in order to increase your pension.


Delay the date of retirement income

There are different ways by which you can increase your pension by delaying the date of retirement income including the following:

  • You will have additional time to invest in your pension pot and this means that the accumulated pension funds will increase when you retire.
  • Your pension funds will grow if they were invested properly, but you should take care about any fall in your investments.
  • When you grow older, the rates for annuities that you could buy will raise. So, you will make sure that these annuities will yield you a higher guaranteed income after retirement.

Before delaying your retirement income date, it is important to discuss it with your pension provider because he may charge you for this decision.


Increase personal pension contribution

Your pension funds after retirement are taxed. So, you may be better to prepare for this situation earlier. In fact, if you are a higher rate tax payer in the years before retirement, you will increase your personal income contribution in a tax relief form by £80. Furthermore, an additional £20 will be added by the government if you are taxed at the basic rate of 20%. That means the overall governmental contribution will be £100 in the form of tax relief.


Defer the state pension

State pension rules that are declared in 6 of April, 2016 push matures to defer their state pension as it will make a great difference in boasting their pension funds. When you reach your state pension age, each 9 weeks you leave your pension without claiming will increase it by 1% which means your pension funds will raise by about 5.8% for every year you defer the state pension.


How can you claim your pension?

When you reach the state pension age, you will not directly receive your pension funds, you have to claim it first. An invitation letter is usually sent to matures who are about to reach their state pension age. You will usually receive it 2 month at most before your pension date. However, you may not receive it. So, you will have to claim your pension. It could be done online, by phone, or by downloading the form of state pension claim and send it to the local pension center after filling information. Furthermore, you can claim your pension from abroad through the Isle of Man.

There is no relation between claiming your pension and retirement. So, you can claim it while you are still working. However, it is more recommended to defer your state pension for a longer time in order to receive more money later. But regarding pension that is claimed from the Isle of Man, it couldn’t be deferred like the UK state pension. It is claimed separately at your pension age.