How to read your annual pension statement

A recent survey reported that 71% of us don’t read our annual pension statement or just give it a cursory glance.

This certainly touched a chord with many of my readers.  Their comments were generally along the lines of “OK, I tried but it’s still gobbledygook.  What can I do next?”

It may be that your pension provider is only telling you what, by law, is compulsory for you to know and making little attempt to be user friendly.  If that is the case the probability is that they are also failing in other areas and you need to seriously consider a transfer to someone who is getting it right.

Here are my thoughts on just seven things you should find and understand on reading your statement. Get the latest statement out and give yourself a mark out of ten on how well you can answer each question.

• What is the default pension age and is that what you want?
• What is the projected fund value at the default pension age?
• Can you see what pension the fund will buy you at retirement and whether that takes into account inflation?
• Can you see how your pension fund is invested and can you remember why you made that choice?
• Can you see how the fund has performed and compare it with other funds’ performance?
• Can you identify the charges which are being deducted and the effect on performance?
• Does it show a transfer value and is that the same as the fund value?

SCARY ISN’T IT. The list could go on and on but you probably have the point already and I don’t want you to lose the will to live!

If you think you have done well on your score out of ten congratulations.  You are very much in the minority and you may not need further help.  If not what should you do next?

If you have an adviser you still like and trust give him/her a ring and insist he/she explains the statement to you and how they are adding sufficient value to justify their fees.  If the fund selection has not been changed in the last five years ask why not.

The alternative is to accept that this is your money and looking after it is your responsibility.

If you are in a final salary scheme such as the Teachers or NHS Scheme the questions are different. Just use the box on the right to tell me and I will send you the relevant list.

Some of you will just need some guidance on setting up the right systems and processes online using one of the platforms such as Hargreaves Lansdown. Others will need on going support and guidance. Either way the Investment and Retirement Coach Programme can help.  Just click the box on the right to arrange a chat. It won’t take long to decide what type of help you need.

The transfer process is very straightforward.  Take a look at our previous “time to consolidate those old pension plans” post.  Waiting until retirement and then wondering why it all went wrong is really not a sensible option.  The theme which has run through recent blog posts is “PAY ATTENTION”.  I know it’s not easy.  Burying your head in the sand might be easy but it most definitely is not the right answer.

If you prefer just post your questions to this blog and then everyone can benefit from the answers. Also, don’t forget to sign up for blog updates below so that you don’t miss something which is really important to you.

This is your money and your future

Once you have set up the right systems and processes looking after it will take no time at all and you certainly do not need to become an investment expert.  All of the knowledge and information is out there once you decide to pay attention.  It only needs a tiny increase in performance and reduction in charges to make a huge difference in outcome.

Please, please give your money the time and attention it deserves.  It will then work very hard for for you – that is it’s job but you must give it a fighting chance.