Is now the time to review and get more from your pension?

Meet with one of our local pension experts to find out how

Maximising your pension performance

A pension is a tax efficient way to save for your retirement. Its performance can fluctuate markedly according to prevailing economic conditions, and there are numerous options in terms of diversifying the spread of investments or consolidating policies together.

At Select Investment Managers, we recognise that achieving the maximum return from a pension vehicle (and avoiding any shortfall) is crucial to generate sufficient income for a safe and happy retirement. We also appreciate that this industry’s complexity can seem daunting to people wishing to investigate their options, or make changes to their existing policies.

For these reasons, our knowledgeable financial advisers offer jargon-free support and recommendations based around each client’s unique circumstances and preferences. As regulated financial planners, we won’t suggest high-risk strategies unless our clients expressly request them. At the same time, we’ll provide detailed guidance on how to aim to extract the best returns from each pension vehicle.

A regular pension review can ensure that the most suitable path is being taken in terms of risk and rates of return. We believe this is a conversation that’s best conducted face-to-face, so that clients understand why any changes are being recommended – and what it will mean for their pensions. That’s why Select Investment Managers has a team of expert financial advisers in Edinburgh, as well as surrounding towns including Falkirk and Livingston. These experts are ready to sit down and talk through a wide range of available options.

  • Salary and income levels. Tax is paid on a lot of savings income, so a higher-rate taxpayer will currently lose 40 per cent of any interest over £500 and a basic-rate taxpayer would lose 20 per cent of anything over £1,000.
  • Frequency of withdrawal. Typically, higher rates of return are available on investment vehicles where the money can’t be accessed for a certain period of time.
  • Risk aversion. The highest rates of return are often found in relatively risky areas like the stock market, where it’s possible to make (or lose) significant sums. Conversely, the first £85,000 invested with each UK-regulated bank or building society is protected from loss under the Financial Services Compensation Scheme (FSCS).
  • Willingness to transfer funds. Many savings vehicles offer tempting introductory interest rates for a limited period, before defaulting to lower rates. Being willing to regularly switch accounts can ensure savings continue to accrue respectable levels of interest. Before transferring funds it is vital to check whether or not you will lose any guarantees or incur any fees by moving your money.

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Why a review may be needed

Many people are content to direct a fixed monthly sum into their pension, and then leave it to its own devices. However, there are various factors that can affect the performance of a pension over time, and each may require adjustments or changes. Our team of experts (based in Edinburgh and across central Scotland) can offer practical advice on aspects including:

  • Cost. Setting aside a certain percentage of monthly income may be optimal at the moment, but what about when incomes vary or circumstances change? Today’s pension commitments may not be appropriate tomorrow. There may also be management and administrative charges levied on different funds, which should be reviewed periodically.
  • Performance. Pensions work by reinvesting regular contributions into a diverse variety of investment options, such as shares and bonds. Each vehicle’s performance will fluctuate over time, as the economy ebbs and flows. Rather than entrusting the pension provider’s default option, it’s often better to make key decisions about where money can work hardest.
  • Risk management. It’s a common phenomenon that younger people take more risks with their investments, before adopting a more cautious approach as they get older. Changing an investment strategy as retirement age approaches is a sensible step, but also one that requires expert consultation to ensure the right decisions are made. That’s particularly true for specialised funds, where financial knowledge is vital.
  • Consolidation. Many people have small pensions amassed during a particular spell of employment, which are individually modest but collectively offer the prospect of a comfortable retirement. Consolidating these into a single high-performing vehicle can be time-consuming, but it’s a step that may be worth taking if the pensions aren’t defined benefit schemes and you won’t lose any guarantees/benefits or incur any penalties. Speak to one of our advisers to see if this is appropriate for you.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount you invested.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

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