How to check your pension pot

— by Adrienne Wyper

Do you know how much your pension income will be? No? Until recently, neither did I. And we’re not alone: research by Aviva revealed that 40% of those aged 46-55 didn’t know how much they had in their pension. For me, the thought of looking into it was about as appealing as shopping around for insurance or a new mobile contract. But as I approached 55, the age at which you can access your pension pot(s), I did it although I was, frankly, scared that I’d find out it might not be enough to live on…

In my lifetime, my retirement age (ie, when I get my state pension) has gone up by seven years, from 60 to 65 in 1995, to 67 in 2011. I’m hoping that government proposals to increase that age to 75 never enter the statute book, although a recent campaign by the Association of British Insurers to raise the age at which you can dip your hand into your pension – known as the ‘pension freedom age’ – from 55 to 57, seems sensible to me.

Check your state pension

First, find out how much state pension you qualify for. To get the full £168.60 a week (£8,767.20 a year; £730.60 a month), you need to have paid National Insurance contributions for 35 years. Click here for an instant answer on how much state pension you’ll receive. (You may need to register with the government portal first.)

Track down any private or workplace pensions

Next, gather together all the pension info you can find on employers’ schemes and personal pension plans: all those annual statements you glance at and probably shove in a drawer, and letters informing you it’s time to decide what to do with your pension. If you don’t have any of this paperwork, you may have forgotten to tell the organisations concerned when you moved house. Luckily, there’s an easy way to round up those stray potential pension pots. If the company is still going, ask them. If they’ve gone out of business or been taken over, use the Pension Tracing Service. Call on 0845 600 2537 or do an online search here to find out the current custodian of your pension pot.

You might have forgotten whether you joined a pension scheme. Last summer I met up with an old colleague I hadn’t seen for 30-odd years and he reminded me that our former employer’s pension was really good, and to check if I’d joined. It’s useful to make a note of what each is worth, and when it starts to pay out. In my case, I have three workplace pensions, two personal pensions, and a full state pension. One of mine starts when I’m 60, the rest at 65, and the state kicks in at 67.

What you can do with your pension pot

Once you reach the age of 55 (or earlier, if you’re seriously ill) you can:

Leave that money alone, and it continues to grow, tax free.

Withdraw up to 25% of the money as a tax-free lump sum, then use the rest to buy an annuity, which is guaranteed income for life.

Withdraw up to 25% of the money as a tax-free lump sum, then use the rest for pension drawdown, where you invest in funds designed to provide you with a regular taxable income.

Take regular sums out. Again, the first 25% of each withdrawal is tax-free and you pay tax on the rest.

Take all of the money in one go, when you’ll pay tax on 75% of it.

Mix and match the above options.

That’s a very simplistic summary, and you need professional advice.

Rules of thumb for pensions

If you save at least 12.5% of your income into your pension, you should be fine.

Every £1,000 in your pot means £1 a week in pension payout.

Around 70% of your salary is a good retirement income.

Get pension advice

Estimate your retirement income with the Money Advice Service’s pension calculator, whose sliders let you try different scenarios to show the effect on your finances. Find the calculator here.

Book a free Pension Wise appointment, open to everyone over 50 for advice on your options (not financial advice, but an explanation of the options above, and more). After explaining how pensions work, and answering any questions, the adviser emails a summary of your situation, and possible action to take – really useful if you find it hard to take in lots of info in one go. Uptake has trebled since the service was introduced, and 95% of people who’ve used it say they’d recommend it. Book a free Pension Wise appointment here.

The thought of looking at your pension provision may be tedious and terrifying in equal measure, but don’t put your head in the sand about your pension. Remember: knowledge is power.



Adrienne Wyper writes about life, health and wellbeing.

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