Pensions: Exercise for your long-term financial wellbeing!

I have a wife, three young children and I work for myself. It can be tough to find time to get the exercise that I would like. I know exercise will help me feel better and will more than likely be extremely beneficial to me in the long-term if I keep it up. As such I have started to do a boxcercise class.

For me, exercise is not just about feeling good now; it’s about trying to feel good in the future. It’s about trying to condition my body to be healthy and strong and in the long term I hope it might extend my life. I know that exercise can improve my immune system which in turn may allow me to be more active in my later years.

A Pension is a personal retirement savings account (PRSA). You could say its exercise for your financial wellbeing. It’s about putting the work in now, so that you may benefit in the long term, particularly in your later years when you may not have the same opportunities to enhance your financial health.

There are days when for numerous reasons I really don’t want to get out to do the boxcercise. The days I push myself to get up and do it, I feel better and the days I give in and rest, I feel a little guilty. I can honestly say that any client that comes to me at retirement is happy when they have a Pension of their own to drawdown. In many cases they express remorse that they didn’t save more when they had the opportunity to do so.

Like exercise, the sooner you start contributing to a Pension the better the potential long term benefits. I know that I would prefer to retire as young as I can, but I also know that will be very much dependant on my physical health and my financial health. In both cases, I can only commit so much time/money now, but a little bit of both is better than nothing of either.

Questions on old Pensions left behind...perhaps even ones forgotten!

In this article I will run through some of the most frequently asked questions in relation to old paid up pensions. These are pensions that you may have had with a previous employer that you never moved or enquired about at the time you left employment.

How do I get information about my old Pension?

In most cases you should be receiving annual benefit statements with general details (including the value) of your Pension. If you are unsure where to look, the company’s human resource department (or Employee Pension department if there is one) is a good start.

Can I bring my pension with me when I move employment?

In most cases, when you leave employment, you have several options. Indeed you are entitled to request “leaving service options” which sets out exactly what you can do with your Pension. This can intimidate and confuse people but if it’s explained correctly I find people are more confident moving their Pension into their own name.

Will I lose out if I move out of the old Pension arrangement?

The only way of knowing is by enquiring about the benefits currently on the Pension plan, but in many cases you can actually benefit from moving your Pension funds into your own name.

If you do move a pension to your own name one of the biggest benefits is that you get direct access/information sent to you personally about you Pension. Some people like having complete control over their Pension and like not having to contact a Trustee (or old employer) anytime they want information regarding their Pension.

What can Drumgoole Financial Services Limited do for you?

Part of my job is to help people arrange their pensions together into an efficient/transparent portfolio. In simple terms this means you know exactly what you have and where you have it.

When many people move on from a job, they leave their Pension paid up (sitting idle) in their old Pension arrangement. I have had clients contact me who have had no correspondence in relation to their Pension for one reason or another.

Clarity of Pension advice. . . . . . .

I have had numerous meetings with people locally who have contacted me because they had an experience with a door to door Pension salesman from a specified Pension provider. Some of the following are quotes used by people I have met:

  • “This salesperson does not listen to what we were saying and only wanted to discuss specific things that were encouraging us to take out a policy”

  • “I found this salesperson very pushy. They stated that their Pension company had the best investment funds and the cheapest charges in the industry”

Charges

A Pension policy where there are significantly high up front charges in the first few years are not always the cheapest or cost effective in the long run. In many cases there are certain bonus’s linked to these plans, but many people might not meet the criteria to benefit from these bonus’s that can distort the quote you receive.

I have sat down with several people who had been contributing to this Pension plan and after a couple of years are shocked with the value. There was one client who was shocked to learn that it stated on his Pension statement that these savage early charges would also apply to any potential increase he makes to his pension in the future.

Fund Performance

On any given month, many of the top Pension providers can say that they have one/some of the best funds in a specified field. This does not make them the best Fund manager in the market. For example a company may have a fund that did well from a specified timeframe (exactly 5 years) right now, but another company may have better fund performance figures over a 10/15/20 year period.

Confidence in saving for your Pension

If you are not fully confident or convinced by what a salesperson is saying then you should always consider getting a second opinion. A person who can only sell a pension , investment or Life assurance plan from the one company is only able to discuss these products in how their company has instructed. Different Pension providers have different charges and most of them nowadays do not do up front charges because many people might have to stop and start Pension payments as their situation changes.

Not sure? Give me a call . . . .

If you are not sure of what you are being sold or told, please do not hesitate to contact me.

What happened to my Pension savings when I moved Jobs?

If you or your partner were contributing to a Pension arrangement in a job that you have since left, then you may have Pension savings sitting paid up in your former Employer’s Pension scheme. Indeed the same may be the case if your employer was contributing to a Pension Plan on your behalf while you were working in that company.

When people change employment, many people do not think about personally taking control or moving the Pension fund that they had built up during the years working in this company. You are entitled to what is called “leaving service options” when you leave employment. These are a list of options of what you can do with your Pension Fund now that you are leaving.

In many cases one of the options is that you do not have to move the Pension savings and they can remain in this company Pension plan until you are at retirement age, at which stage you can drawdown your entitlements. But it is worth considering another option that you may be entitled to take. This option allows you to move your Pension savings from the company Pension plan to a Pension arrangement in your own name.

The main benefit to moving from a Company Pension arrangement into a Pension arrangement in your own name would be:

  • All Correspondence is sent directly to you as opposed to the trustee whom in many cases is your previous employer

  • You are in complete control over your Pension and do not require signoff from a third party (trustee) when you wish to move it or draw down your entitlements

  • It can be easier and quicker to get information on your Pension(s) which also makes it easier to keep tabs on exactly how many Pensions you have and where they are.

Some people like to put all their Pensions into one Pension plan. While it has its advantages, it is worth noting that in some cases it can be beneficial to keep some Pension plans separate. A big reason would be if at retirement, you have only one big Pension plan, you must take your full retirement options. If you have several Pension arrangements you can draw your retirement options down at different times if it is more convenient.