Retirement planning is a conversation many prefer to postpone to a later date. This is because retirement appears to be a future conversation, given the exigencies of today’s financial pressures. Although it may be in the future, planning for your retirement is an important step that must be taken early in your working life. Advisedly, retirement planning should begin from the day you earn your very first income.
Just in case you believe you still have enough time to retire; subtract your current age from say 55 (potential retirement age) and you will notice you are not too far from saying goodbye to active service. The big question is: will you be financially ready?
Hence, one of the critical steps to take in your retirement planning journey as an employee is to insist on knowing a few important points (discussed below) from your Pensions Trustee, Administrator or Provider.
Insist on knowing these from your Pensions Trust
As a member of a Pension scheme, you have a right to be given certain information about what you have signed up to without having to ask for it. Your Scheme Administrator must give you relevant information about your pension automatically.
Additionally, if you are in a defined benefit scheme, the scheme must send you, every year, a summary funding statement. This gives you important details about which of your contributions are being captured correctly or otherwise, and the scheme’s ability to pay benefits due under it.
If you are automatically enrolled in your workplace pension scheme, you must be told about automatic enrollment; that you have been automatically enrolled and what this means to you; and about your right to opt-out.
If you do not qualify to be automatically enrolled, you must be told about the workplace pension scheme and your right to choose to join same. This information must be given to you before the end of the month in which you are automatically enrolled.
Basic details of workplace pension schemes
If you are automatically enrolled, you should be given the basic details of the scheme within one month of being enrolled. If you are choosing to join a pension scheme, you should be given the same within two months of joining the scheme. The type of information you must be given includes:
- What the scheme is called and who the trustees are
- How you build up benefits and how you can transfer other pension contributions into the existing scheme
- The rate of employer and employee contributions and how you can pay more
- Whether the pension scheme is registered with the Pensions Regulatory Authority
- Whether dependents’ benefits are payable, and if so the conditions for payment and how to get a transfer quote, a refund of what you have paid in, or details of the benefits you have built up
- How to complain about the scheme, including how to contact the Trustee or the Pensions Regulator about a complaint
- Also, if your workplace pension scheme is a defined contribution scheme, your scheme must tell you about your investment options, including investment charges. Your scheme administrator or trustee will probably give you a scheme-particular containing this information.
- If you have a stakeholder pension, your provider should send you an annual statement automatically within three months to end of the scheme year.
The statement must contain, as a minimum:
- the value of your contributions on the day before the start of the statement year; the value of your contributions on the last day of the statement year (or at the time when you left the scheme if you left during the year)
- the amounts paid in by you
- the amounts paid in by your employer
- the amount of any tax relief paid into your pot
- any amounts deducted for charges or fees; and
- a statement giving a list of other information that you can request, such as the amount of investment gain or any amounts transferred in from another pot.
Insisting on knowing all the above will help you estimate the average retirement income that will be available to you when you retire. It is important to ensure deliberate effort is applied across all your retirement income sources: Social Security Income (Tier 1), Social Security Income (Tier 2), Employer assisted pension / Provident funds, Personal pension and any funds you have personally invested toward your retirement.
Remember, you deserve to enjoy a financially independent retirement without having to depend on stipends from family, friends or children who may be busy with their own financial stresses at the time you need them the most. In case you have not done all the above, talk to your Pensions Advisor now for help.