If you have not reviewed and changed your pension investment strategy in the past 12 months you really have missed a trick.
The situation is the same whether you are building up your pension fund or are already in retirement and drawing from your fund.
The new “pension freedom” legislation has changed the playing field so much that previous investment strategies just will not work.
If you are building up your fund not paying attention may well result in delayed retirement or a lower standard of living for many years in retirement. A previous blog showed an example of how improving returns by just 2% pa could bring retirement forward by 4 years.
The reality of the situation is that most investment strategies pre “pension freedoms” assumed that you would cash in your pension investments at retirement and buy an annuity. All the evidence is that few people will now buy an annuity and yet most investment strategies still assume annuity purchase. This makes no sense at all.
Your standard of living in retirement will be dependent on the design, implementation and review of the right pension investment strategy and that is your responsibility. Default funds, by design, assume annuity purchase and just will not work.
If you are like most people you will be hoping or believing that someone else will be paying attention to this for you. Perhaps your employer, your pension provider or your adviser. More often than not no-one is accepting this responsibility. It really is down to you.
If you are drawing from your pension funds the situation is even more worrying. Many advisers use “model portfolios” which operate by selling investments every month to meet withdrawals. In August you will have sold approx 12% more investments than a few months ago to cover your withdrawals. You will probably have been happy with investment returns over the past few years but if this slippery slope continues you will not be happy next year!!
If you have an adviser you know, like and trust who has significantly changed your pension investment strategy over the last 12 months, well done. If that isn’t the case I believe you should seriously think about taking control for yourself. After all it is YOUR MONEY. No one will take as much interest in it as you.
The online platforms allow you take control of your investments at lower cost than using a financial adviser. Even if you add in the cost of some guidance you will still save money and get access to online valuations. Take a look at www.hl.co.uk.
If you still need some guidance just check the box on the right and book a free telephone consultation.
Future blogs will build on this theme so check the box below to make sure you don’t miss out.
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The Chancellor said “people should be trusted with their own money”. Spot on but none of us can be trusted with anything to which we are not paying attention. Are you paying attention or just hoping there will be someone else to blame when it all goes wrong?
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