A study has shown that pension contributions have fallen in the past year, just as the cost of living in retirement is on the increase.
The latest study from Alliance Trust calculated that for over 75′s, inflation is running at 7 per cent, the highest level in the 6 year history of the research. Inflation may be close to peaking, but the rate faced by those in retirement is likely to remain above the official level, with pensioners spending more on such things as household energy bills.
Add to that rising longevity, which means the period of retirement to be funded is getting longer because peolple are living longer in retirement, and the need to put enough money away to boost that pension pot to buy that valuable annuity couldn’t be more stark.
Here’s some things you can do:
Take advantage of a company pension scheme. The contributions and benefits are usually worthwhile.
Consider salary sacrifice, where you are essentially swapping a bit of your pre-tax pay for more pension contributions, so you don’t have to pay income tax or National Insurance (NI) contributions.
Keep an eye on and review your pension investments. Millions of investors remain in funds that were once strong and reliable performers but are now struggling.
When you reach retirement look to maximise the income from an annuity. Millions of people miss out on valuable retirement income by failing to use the open market option (OMO) to shop around for annuities. Depending on your circumstances, you could get 20/30% more by shopping around.
Check out your entitlement to pension credits. Around £2 billion in pension credits goes unclaimed each year, and it really could make a difference to a retirement lifestyle.
So there are some things you can do, but to get the best results, talk to a specialist adviser.
