Are you saving enough to be able to stop work one day? That is what retirement savings are for! But understanding your pension savings can be daunting. It is never too early to start, and the sooner you begin the easier it will be. Follow these simple steps to help feel more in control about your retirement planning.

Step 1: Know what you need when you retire

It’s hard to know whether you’re on track if you don’t know what you’re aiming for. The first step is to therefore estimate the target retirement income you need.

There are lots of ways to do this. Perhaps the simplest is to start with your current earnings, deduct anything you won’t need when you stop work (e.g. travel costs, money for pension savings!), and add in any extras (e.g. daytime home energy costs, hobbies and leisure activities). We recommend doing this for your household for the best overall picture.

Step 2: What pensions do you have, and what are you building up?

Once you know what you’re aiming for, it’s time to check how your pension savings compare. You may well have pension savings in a few places, so start by tracking each of them down to find out what income and/or lump sums they may provide you with, and when.

State Pension: you build this up by paying national insurance contributions (NICs). You need at least 10 years’ worth of NICs to build up any entitlement, and 35 years of paying full rate NICs to get the maximum. See the section above ‘Check your state pension’ to find out how to get a forecast of your state pension entitlement.

Workplace pensions: contact the scheme’s administrator and ask them for an updated benefit statement. If you do not have a recent statement from the RGPS, you can contact the Scheme Administrator using the details at the end of this newsletter.

If you have lost track of any pension savings, use the official tracing service here: https://www.gov.uk/find-pension-contact-details

Remember to include any other non-pension savings that you’ve set aside for retirement too (for example cash savings, investments, ISAs).

If there is a gap, think about what you can do – can you save a bit more? Can you cut down what you might need in retirement and reduce your target? Taking steps now could help to bring you back on track to reach your target.

Step 3: Know where to go for help

Make the most of free help that is available. The Money Advice Service has lots of help on its website, which covers lots more than just retirement planning.

Pension Wise is another free service for over 50s if you have defined contribution (DC) savings in other pension arrangements. Pension Wise provides independent guidance online, by phone and face to face.
Links to the websites for both The Money Advice Service and Pension Wise are included in this newsletter, along with several other useful websites.

You might feel that guidance isn’t enough, and you’d like to seek some independent financial advice. Make sure you find an adviser who is a qualified pension specialist. Your adviser should help you to understand your pension options and recommend the ones which are best suited to you.

Avoid the scammers! Make sure you know who you’re dealing with. As a rule of thumb, ignore cold callers offering “free pensions reviews”, time-pressured offers and remember, if it sounds too good to be true, it probably is!