Optimising your Legacy Pension Funds

Insight | by Stephen Kiggins
Man studying paperwork

As you’ll no doubt be aware, retirement planning is a critical step in taking control of your financial future, but where should you start?

One way to ensure that your finances are properly managed is to optimise the funds available in your existing pension pot.

In this article, we’ll take a look at how you can optimise your legacy pension funds, make the most of your savings, and build a secure future when you retire.

What are legacy pension funds?

There are two main types of pension scheme; Defined Contribution schemes and Defined Benefit schemes.

Defined Contribution pensions – also known as ‘money purchase schemes’ – are where your own contributions and your employer’s are both invested and the proceeds used to buy a pension at retirement.

Defined Benefit pension schemes – or ‘final salary’ pensions – are schemes where the amount is based on the salary you’ve earned when you leave or retire. They pay out a secure income for life which increases each year in line with inflation.

These days we’re more transient in our careers, and likely to move from job to job. This can result in a number of legacy workplace pension pots having been built up with different employers. It can be easy to lose track of these, but worthwhile in tracing them.

Why it’s important to optimise them

Your legacy pension funds can form a significant portion of your retirement income. But if they’re not regularly managed they may not be realising their full potential. You may be invested in inappropriate funds for example, or perhaps even be paying too much in charges. They may not be aligned with your goals for retirement, or your appetite for risk.

It’s possible to make strategic decisions and potentially increase the value of your retirement savings, such as rebalancing your funds, redirecting your contributions, or looking at other options. Taking a pro-active decision to optimising your pension funds can help to ensure that you’re getting the best return on your investment, and that you’re making the most of the money you’ve saved.

In addition, legacy pension funds can play an important role in long-term care planning.

How can you do this

If you want to make sure that your legacy pension funds are running as optimally as possible, there are a few steps you can take.

Firstly, you could make sure you have all the details of schemes you’re a member of by making a note of all your employers and then checking through your paperwork and online records for details of any pension arrangements.

If you’re unable to find any records, there’s a government website to help find the contact details of any employer schemes you might have been a member of, or personal arrangements you may have set up yourself.

Secondly you can evaluate your current investment portfolio to make sure that it aligns with your financial goals and risk tolerance. Consider diversifying your investments, if necessary, to reduce risk. Take the time to research stocks, mutual funds and other investments, such as ETFs, that may be suitable for your retirement goals.

Thirdly, consult with a financial professional. A qualified adviser can provide you with sound advice that takes into consideration your unique situation and retirement goals. They can review your portfolio and suggest ways to help you ensure that your investment strategy is in line with your attitude to risk and thus optimise the returns of your legacy pension funds.

With the right strategy and regular monitoring, you can ensure that your legacy pension funds are working for you and your retirement goals.

Why it’s good to speak to a financial adviser about this

When it comes to retirement planning, it’s important to take a long-term view.

A financial adviser understands the different investments available and can help you to plan your retirement. They can explain the risks they are attached to each option, as well as how the performance of investments might be affected by shifts in the stock market, taxation or government policies. They can also provide guidance on the different contribution requirements and suggest potential strategies to optimise the returns on your pension funds.

A financial adviser can also assist you with tax planning, saving you money in the long run. Alternatively, they can provide credible advice on where to put your money so that it’s accessible in the future.

By speaking to a financial adviser, you’re taking the right steps to ensure that your pension is in the healthiest possible position so that you can look forward to a secure and comfortable retirement.

As financial advisers, retirement planners and pensions specialists Forth Capital can help you and ensure that you are retirement ready. We operate around the globe offering face-to-face, online and over-the-phone advice from our dual-qualified advisers who have personal experience of expat life. contact us today to arrange an initial consultation with one of our expert advisers.

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