Page 45 - DIY Investor Magazine - Issue 26

cover and energy bills each year and shopping around for a better deal each year.
The same is true of mortgages, with many people fixing their rate for a few years and then re-mortgaging to the best deal when the old one finishes. And despite record low interest rates, most of us will always be on the lookout for the best rates for our cash savings.
‘JUST 14% OF EMPLOYEES SAID THEY KNEW EXACTLY HOW MUCH WAS SAVED ACROSS ALL OF THEIR PENSION POTS’
So it is worrying that so many people don’t review their pensions on a more regular basis, considering how much wealth is tied up in pension plans and how important retirement planning is in helping to prepare our finances for later life.
While consumers can save tens of pounds by switching other financial products like insurance cover, the savings they could make by reviewing their pensions could be more significant. Clearly one of the drawbacks of an auto enrolment workplace pensions is that is seems many employees almost forget they have one, probably because the onus is on their employer to set it up and manage it on their behalf.
All the employee has to do is agree to the level of contribution taken from their salary, particularly if they don’t want to add more than the minimum basic contribution. EQi’s research found that just 14% of employees said they knew exactly how much was saved across all of their pension pots.
However, EQi found that self-employed workers and business owners are much more active in managing their pensions, with almost a quarter (24%) of self-employed people EQi surveyed saying they knew how much was in their pension pots.
This is because they won’t have an auto enrolment workplace pension and will have to make their own provision, so they are likely to take more interest in choosing the right pension plan, how much they contribute and how it is performing.
If you have a number of different pension pots that have become difficult to keep track of, one option is to look at combining them into a SIPP – a Self-Invested Pension Plan.
A SIPP is a great way of getting a single view of your retirement savings in one place and taking control of how you invest your money, with more choice of investment options such as shares and funds, as well as a clear picture of how those investments are performing.
And because it is a single pension plan, you will know exactly how much you are spending on fees and will probably be able to save money compared to the cost of paying individual fees on lots of different legacy pensions.
SIPPs aren’t suitable for everyone or indeed every type of pension. Some retirement plans come with additional benefits that you might lose if you consolidate them into a SIPP.
SIPPs are also not recommended for people with a final salary or defined benefit workplace pension, because these plans provide you with a guaranteed annual income for life based on your final or average salary that you are likely to lose if you transferred it to a SIPP.
‘A SIPP IS A GREAT WAY OF GETTING A SINGLE VIEW OF YOUR RETIREMENT SAVINGS IN ONE PLACE AND TAKING CONTROL OF HOW YOU INVEST YOUR MONEY’
If you’re not sure about your existing pensions, you should always talk to a financial adviser first before making any decisions.
As EQi’s research shows, there are an awful lot of people in
the dark about how much they have in retirement savings
and whether that will be enough to give them the life they
want when they stop working. Opening a SIPP could be just the thing they need to get a better handle on how much they already have in their pension and help them save more towards the retirement they want.
EQi’s research was carried out by the Centre for Economic and Business Research (Cebr), including a survey of more than 2,000 adults by YouGov.
EQi is a DIY investing platform designed for individuals.
It gives you access to global markets, control over your investments and offers customers award-winning support
FIND OUT MORE ABOUT EQI FIND OUT MORE ABOUT SIPP
45 DIY Investor Magazine | Dec 2020