The value of forward planning and regular reviews

Mike Wallis

Origen Private Client Adviser

Forward planning and making pension contributions is important, subject to maximum pension contribution allowances and affordability, however it is not the only factor that should be central to your retirement plans.

From April, the minimum contributions for employers and employees to workplace pensions have been raised, which has created some debate about how much people should contribute for a happy and secure retirement. Making contributions is only half the story and having built up a pension fund, an important factor is how are your investments performing?

Setting a retirement objective

The earlier you start paying into the pension and the longer the investment term, makes reaching your target retirement income more achievable and more affordable. Research by Legal & General demonstrates that to provide an annual income of £5,000 in retirement from age 65, pension contributions will need to increase quite considerably the later that you start saving.

Source L&G 2018

Starting pension contributions earlier is more manageable and makes it more likely for you to hit your retirement income objectives. But if you are approaching or already in retirement, how can you make sure your investments can provide your required income?

Reviewing your investment performance

Making pension or investment contributions is only the first step. Are you actively monitoring the performance of your pension fund or investments to check that you remain on track?

The table below highlights how the same contributions to a personal pension can provide very different levels of retirement income if the rates of return are lower than expected. It is important that the level of investment risk that you are willing and able to take is reflected in your investment choices.

Source L&G 2018

This table shows that the investment returns are very important and can have a major impact on the levels of retirement income you can expect to receive. These figures are only examples, you could get back more or less than this. The size of your pension pot will depend on the contributions you make, how well the investments in your pension pot perform, and the charges taken from your plan.

How your investments perform remains a vital ingredient for financial planning success. For example, in retirement, if investments of £10,000 are returning 1.5%, then it will only provide £150 growth, whereas a 5.4% return will provide £540. Meeting a target level of return can help to ensure that your investments provide sustainable income throughout retirement.

The importance of regular financial reviews

If your investments and pension plans are regularly reviewed and maintained, then working with your adviser, you can keep on track to provide the expected levels of income in retirement. 

At review meetings, we can assess your progress towards your financial goals. We can consider how your financial needs or circumstances may have changed and then review your financial plans, taking account of all your income sources and investments to assess your income requirements. We can then provide our advice recommendations to help you to either get back on track or to continue progress towards meeting your financial goals.   

Although we cannot accurately predict the markets and fund performance over time and investments can rise and fall, regular reviews of pensions and investments are essential to monitor your progress and, if required, you may need to adjust your plans or expectations. Fund manager reputations and careers will be determined by providing funds which meet the fund objectives and the needs of their investors.

We provide a fund monitoring service. Our Research and Investment team maintain a recommended funds list for our advisers. They monitor these funds to ensure that they continue to perform in line with expectations. We will review funds on our approved list and let you know if there are any changes that we believe you should be aware of. If appropriate, we will offer you a suitable alternative fund, should your existing fund no longer be on our approved list.

Our ongoing fund monitoring service and regular reviews help to keep your financial planning on track. If you have not reviewed your investments recently, then please contact us on 0344 209 3925 or ask your Origen adviser to discuss our advice services. Calls are charged at your phone company’s basic rate. All calls are recorded for business purposes. 

CA4376 Exp: 05/2020

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