Things to do during lockdown – Part 2 of 4: Pension Funds

These are uncertain times during which the UK Government has advised its citizens to remain at home in order to stay safe and to protect our vital National Health Service. The UK lockdown measures have now been extended until early May. Therefore if you find yourself with some available downtime during this period, it may be a worthwhile exercise to put your basic financial planning “house in order” with the help of our simple checklist.

Collate lost pension funds

Are you aware of all of your existing pension fund arrangements? Even from that short-term employment you took up 10 years ago? Any pension funds which you have accumulated in your working life could make a real difference to your overall pension savings when you reach retirement.

Research carried out by The Association of British Insurers in October 2018 estimates that there is nearly £20 billion held within 1.6 million pension pots with an average size of £13,000 which have been forgotten.

If you suspect that you have an old pension pot from a previous job, you are now able to track down the pension scheme’s contact details by using the ‘Pension Tracing Service’ which is a free government service on the following address:

Update pension beneficiary form (expression of wishes)

You may have reviewed your will, but do you know who will inherit your pension benefits? Pensions normally do not form part of your estate for inheritance tax purposes and are therefore not covered by your will. In order to specify who you want to inherit your pension after your death you need to have an Expression of Wish in place, and if any of your pensions pre-date your current relationship then you may want to review this to ensure they are up to date.

The best chance of ensuring your beneficiaries are able to retain the tax advantageous pension wrapper in the form of a beneficiaries’ pension, is to list them specifically on your Expression of Wish form and check the death benefit options of your existing arrangement.

You should contact your pension providers to find out your current nomination and to obtain the relevant forms as soon as possible.

State Pension

In 2016 the UK Government introduced the new single-tier State Pension. Under the previous system it was difficult to understand exactly what you may have been entitled to until you reached your state retirement age, however the new system is designed to make this far simpler.

The new State Pension is based on your National Insurance record, requiring an individual to have 35 qualifying years to be eligible to receive the full amount. A qualifying year can include years where you have been in full time employment, or where an individual has received National Insurance credits given to those who have caring responsibilities (i.e. those receiving Child Benefit).

The majority of individuals are unaware of how much they may be eligible to receive as their State Pension, or at what age they will qualify for it. The link below provides further information on how much you could stand to receive and at what date it could become payable. The State Pension could form a valuable part of your retirement income, so understanding your entitlement is essential.

If you need some support with your financial planning or pension funds, please do not hesitate to contact us.