Pensions MOT
As we make our way through the first summer months post lockdowns, we might be thinking about our newfound freedoms and future plans. With the cost of living increase also playing on many people’s minds, you might find finances are at the forefront of your thoughts.
Depending on your age, life stage and circumstances, your finances could look very different to those of even your close friends and family. The Fund is passionate about making sure you are informed and aware of your pension savings, so that it can be one less worry.
For the Fund, summer is synonymous with annual pension statements. June to August sees most teams of the Fund work unanimously to issue statements to our active members (those paying into the Fund) and deferred members (those with pensions on hold). The annual pension statements give a snapshot into the information we hold on your pension pot. This includes what your pension value currently is and what it is predicted to be at retirement. Regardless of if you’re 2 years or 20 years from retirement, taking a few minutes to go over your pension statement can be a real eye opener.
Even having a rough idea of what your expected income is in retirement gives you the chance to make choices now to avoid any future surprises when it comes to your pension. For this reason, the Fund recommends that members review their pension figures at least annually, regardless of how close or far retirement is. You can view your pension statement in the “Documents” area of our secure My Pension tool. Our My Pension tool also allows you to view what your pension could look like under different circumstances with its handy projectors. For example, the voluntary retirement calculator allows you to see how choosing to retire at different ages can affect your pension value.
According to the Pension and Lifetime Savings Association (PLSA), research shows 51% of people focus on their current needs and wants at the expense of providing for the future and only 23% of people are confident they know how much they need to save. To help combat this, the PLSA have developed a set of standards known as the Retirement Living Standards.
The Standards give practical examples of what life in retirement looks like at three different levels, and what a range of common goods and services would cost for each level, allowing you to forecast how your lifestyle could look with varying amounts of income. You might have an idea of how you would spend your days in retirement, or it might be something you’ve never given much thought to but with the Standards you can envision how exactly life would look with £10,900, £20,800, or £33,600 to spend a year.
Your pension with the NESPF is designed to be long-term, a “pension for life” and therefore offers contribution flexibility. How much you pay depends on how much you earn. When you first join and every April after, your employer will decide your contribution rate by comparing your annual pay with the pension scheme's contribution rates. However, if you are struggling with payments or alternatively would like to top up your pension pot, there are different options.
You can reduce your monthly pension payments with 50/50. 50/50 allows you to pay half the contributions and build up half the pension. This way, instead of opting out and saving nothing, you can continue to save for your retirement. 50/50 is designed to be a short-term option for when times are financially tough. As such you'll be brought back into the main section where you pay full contributions around every 3 years. You'll be told when this is happening and will have the option to continue with 50/50. For more information visit Reducing your Contributions.
If you decide you want to give your pension pot a boost, there are two flexible ways to increase your pension with APCs and AVCs. More on these can be found at Increasing your Pension.
If you are struggling to think about how your finances will look in the future, it may be helpful to seek advice from a professional. We are not financial advisors and unfortunately cannot advise you of the best options for your circumstances and preferences. As such you may consider taking advice from a regulated, independent financial advisor. You can find out more on how to do due diligence to source a financial advisor here.
