With millions of people juggling multiple pension pots from various jobs, retirement planning can feel like a challenge. NatWest Premier’s head of financial planning, Laura Newman, has shared four essential tips to simplify the process and help people make the most of their savings.
Ms Newman said: “On average, we know anecdotally that people are likely to have around 10 jobs throughout their lifetime, which often leads to multiple pension pots and scattered assets.
“The movement away from traditional defined benefit schemes like those for NHS workers, teachers, and public servants means that individuals are increasingly responsible for sourcing and managing their own retirement funds.”
Acknowledging the complexity of pensions, Ms Newman advised that while the process can be daunting, there are practical steps people can take to regain control of retirement planning.
In some cases, people may benefit from “consolidating” their pots. Ms Newman said that many people lose track of their various pension schemes as they switch jobs over the years.
She said: “It’s quite common for people to lose track of their pension pots or not stay updated on where their money is invested.”
“Consolidating these assets can offer significant benefits, such as better planning for early retirement, understanding what you need to contribute to meet your goals, and simplifying the overall management of your finances.”
However, consolidation is not always the best option for everyone, so it’s crucial to review the terms and benefits of each plan before making a decision.
Secondly, Ms Newman suggests people focus on planning for the “different phases” of retirement. She explained: “Advisers can help with modelling and ‘phasing’ funds for the different stages of retirement. For instance, clients may opt for an ‘active retirement’ for the first decade which could require more funds, then decide to slow down for the next stage.”
Tailoring retirement plans to lifestyles can make a big difference in how long people’s savings last.
Thirdly, Ms Newman suggests utilising other assets first. Many individuals also have ISAs or other investment portfolios alongside their pensions.
Ms Newman said that tapping into these other assets before the pension can be a smart move. She explained: “We recommend tapping these before touching pensions. In fact, we sometimes see clients leaving these untouched to pass on to future generations. The primary attraction of pensions remains their tax relief, a benefit that could be under scrutiny by future government policies.”
Finally, in an era of increasing fraud, particularly on social media platforms, being cautious with pensions is more important than ever.
Ms Newman warned: “Pension fraud has become increasingly common, with scams appearing on social media such as Facebook. Our advice to customers is if it seems too good to be true, then it is.
“Always have a trusted adviser, whether it’s a personal recommendation or from your bank, and do your research through the FCA website.”
