Worried About Your Pension?


Find out the steps you can take if you’re unsure where you stand with your pension. 

Worried about the value of your pension?

If you have money in some type of investment or pension arrangement, you’ll almost certainly be invested in the stock market.

When you see the value of your investments fall – or you’re worried about that happening – you might be tempted to sell your investments and put them somewhere you think would be safer.

This could reduce the impact of the stock market on your pension, but it may also be an expensive mistake – as you miss out on the chance to recover those losses when the market starts to rise again.

So as unsettling as it may be, ups and downs are a natural part of investing. Staying invested is often the best strategy to take. 

If you have a defined benefit pension, the benefits are guaranteed and it’s the scheme’s responsibility to manage their investments and to ensure there is enough money to pay the benefits they have promised you. If your scheme is unable to do this, The Pension Protection Fund (PPF) will step in. 

If you’re approaching retirement and want to buy an annuity

If you’re thinking of taking your pension as an annuity (a guaranteed income product), the falling cost of annuities may compensate for the fall in value of your pension pot. 

This is because annuities are currently paying out higher rates than they have done in recent times. So an annuity which gives you a guaranteed retirement income either for the rest of your life or a fixed period, may still be your best option.

If you want to take income from your pot

If you’re near retirement and want to take a flexible retirement income  (pension drawdown) from your pension pot, your options are:

  • Wait and see – markets rise and fall over time. Do you have other money you can live off in the meantime?
  • Switch funds – talk to your provider. But bear in mind that moving to a ‘safer’ fund could mean you lock in the current value and you then don’t benefit when the market recovers.
  • Access part of your pot (or one pot if you have more than one) and leave the rest for now.
  • Put your pot into ‘drawdown’. You can usually choose to take up to 25% of your pension pot as a tax-free lump sum when you move some or all your pension pot into drawdown – so the higher the value of your pot, the greater the amount of tax-free cash you can receive.

If you have a partner, you may be able to consider all your pensions together, as it could be in your best interests to take money from some of them now and leave the rest until later.

The income from a Defined Benefit pension is not affected by what happens in the stockmarket. But if you take the pension before your normal retirement age, the amount you receive may be less than if you wait. 

Consider getting regulated financial advice

Regulated financial advisers can give you advice on what to do if you want to stop contributions or take your pension early. Often the cost of advice can be paid directly from your pension pot rather than you having to find the money.

Taking the money out will reduce the value of your pot now, but the advice may give you peace of mind that you are doing the right thing and have considered all options. Over the long term it may represent good value for money and save you making an expensive mistake.

But make sure any adviser you talk to is regulated by the Financial Conduct Authority (FCA), as that gives you more protection if something goes wrong. All the advisers on our Retirement Adviser Directory are FCA regulated.

It’s important not to interact with anyone who contacts you out of the blue and asks for any personal or bank details. Be wary, too, about any pop-up adverts when you are online – many of these firms are not regulated and, at worst, it could be a scam.

Only deal with regulated firms or organisations you’ve researched and which you trust. Reputable companies don’t cold call people.

Help is at hand

Have you got money worries because of the rising cost of living? If so, you’re not alone. If you need the money from your pension to pay off debts or to keep afloat because you are struggling with the rising cost of living, support is available so long as you know where to look. Call us free on 0800 011 3797 or use our webchat.

Join our Facebook groups

Our private Facebook groups are full of money news and updates as soon as we get them. You can ask money questions, share worries and help others out.

If you’re worried about your investments or pensions, don’t suffer in silence. You can join the community in our Pensions group or get money-savings support in our Budgeting and Saving group.

Join our private Budgeting and Saving Facebook group for money-saving tips and support from a community of savers

Be aware of scams

If you’ve been contacted out of the blue and told your pension funds are at risk so that you must move them to a safe place – be careful. Be wary, too, about any pop-up adverts when you are online – many of these firms are not regulated.

Chances are that this is a scam and could that mean you lose all your hard-saved retirement money, which could severely harm your plans for the future. 

For example, you could lose your money and face a tax charge of up to 55% of the amount withdrawn or transferred, plus further charges from your provider. 

Scammers play on our sense of fear, so never feel rushed into making a decision about your pension – or anything to do with your finances. Before you make any big decisions that could put your life savings at risk:

  • check if the firm is authorised and regulated on the Financial Services Register
  • get advice from a regulated financial adviser before you make any big decisions.

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