You’ve probably been saving for a while now and are likely to have a number of employer pension pots that are likely to have accumulated over the years. This can be a good time to take stock of what you have, and make the most of the opportunity still open to you.
If you haven’t really given a thought to retirement yet, there’s still time to make a big difference to your pension.
Source: Office for National Statistics
This snapshot shows the life expectancy for a 40 year old. With a state pension age of 67, you should expect to live 20 years in retirement, with a fair chance of that being 30 years, or even longer.
The first step is to figure out what you might need in retirement, and what your current pensions might provide.
Our retirement calculator will help you to compare your income and expenditure in retirement.
Get an estimate of the income you could receive from your pension with an annuity, drawdown or a combination of both.
If your employer offers a workplace pension, then you should consider contributing whatever is required to get the maximum employer contribution.
If you are self-employed or simply want to pay more, then you can pay in and get tax relief on anything up to your annual limit of £40,000 or to 100% of your earnings if that’s lower.
If you have disposable income then it can make sense to increase your regular contributions to take advantage of the government’s tax relief.
If you’re not on track to save your annual limit of £40,000* (or 100% of your earnings if lower) then you can make a payment whenever you like and take advantage of the tax-relief.
As your circumstances change, you can easily increase, stop or restart your contributions any time to suit you.
Any time you get a pay rise, think about increasing your pension contributions by the same percentage.
The carry forward allowance allows you to make use of any annual allowance you may not have used during the previous three tax years.
To use carry forward, you must make the maximum tax relievable contribution in the current tax year (typically £40,000* in 2017/18) and can then use unused annual allowances from the three previous tax years (provided you were a member of a pension scheme), starting with the tax year three years ago.
You can’t receive tax relief on contributions in excess of your earnings in a tax year and you only receive higher rate tax relief to the extent that you have paid it. Please read our Carry Forward guide (pdf) for more information.
As you’re likely to have already a number of jobs you could easily end up with a dozen or more pensions by the time you retire. Tracking multiple pensions through multiple providers is tricky and time consuming, so why not develop the habit of bringing them together as you go.
If you have savings in several pensions – which is likely if you’ve changed jobs during your career – then bringing them together means you have just one company to deal with for every aspect of your income. Just be sure that if you transfer your pensions to one company, you have access to all the income options.
You can either create your own portfolio or invest in one that is ready made to increase your chances of the retirement you want, remembering of course that the value of investments can go down as well as up, so you may get back less than you invest.
If you are considering paying a large contribution and have income of £150,000 or more (including pension contributions from an employer), you need to be aware of the tapered annual allowance - please read our guide for more information (pdf).
*Tax relief is only available up to 100% of your earnings or £3,600 (gross) if that’s higher. If you contribute more than £40,000 (the annual allowance) in the 2017/18 tax year you may have to pay a tax charge for exceeding this amount, unless you have unused allowance from the any of three previous tax years. If you have earnings above £110,000 the amount you can contribute and get tax relief on may be lower (down to £10,000) and if you have flexibly withdrawn money from your pension savings this could be just £4,000.
In order to request exit fees re-imbursement you will be required to complete an exit fees re-imbursement form which you can download here, or request over the phone by calling us on 0333 300 3351.
Terms and conditions for re-imbursement of exit fees
Fidelity will reimburse the exit/redemption fees charged to a customer by their former provider/s when they move their investments (minimum of £1,000) to Fidelity, up to a maximum amount of £500 per customer.
An exit fee is an administration charge which is imposed by the former provider and arises directly as a result of processing the transfer or re-registration of the customer’s investments to Fidelity. Fidelity will not reimburse the customer for any loss of investment returns, loss of interest, dealing charges, penalties for transferring investments before their maturity dates or any other charges associated with your transfer or re-registration.
Where a re-registration or transfer is not possible and the customer chooses to sell their investments held through another provider and subsequently make new investment/s (minimum £10,000) through Fidelity, Fidelity will cover any account closure fees charged by the customer’s former provider (excluding any dealing charges) of up to £500 per customer. Fidelity will not cover any bid-offer spreads or any capital gains tax liability arising as a result of these transactions.
Exit and account closure fees reimbursement must be claimed within a 6 month period from date of transfer of the customer’s investments to Fidelity. Exit fees will be reimbursed for transfers and re-registrations and account closure fees will be reimbursed provided the conditions above are met. Products included: ISAs, PEPs, Unit Trusts, OEICs, SICAVs, Fidelity Personal Pension, EBS SIPP and the Fidelity SIPP. Products excluded: ShareNetwork.
To qualify for the reimbursement, the fees from the customer’s former provider must have been triggered as a direct result of the transfer or re-registration to Fidelity, or the closure of an account where the customer has subsequently (within 6 months) invested at least £10,000 through Fidelity. If the customer is transferring investments to more than one provider from their former provider at the same time, Fidelity will only reimburse the fees which are incurred as a result of direct transfer or re-registration to Fidelity. Other fees or charges unconnected with the transfer will not be reimbursed.
The completed Exit Fee Reimbursement Form and documentary evidence of the charge will need to be provided in order for the exit fees to be reimbursed to the customer. To claim the reimbursement of any account closure fees, documentary evidence of the closure fee levied will need to be provided to Fidelity, along with confirmation that a minimum of £10,000 has been invested with Fidelity within 6 months of incurring such closure fee.
The documentary evidence referred to above, must be either a copy of the charge confirmation letter from the former provider or a statement showing the charge being deducted.
Payment will be made to the customer by BACS when a bank mandate is held on the account. Alternatively, payment will be made by cheque.
Remember that the value of investments can fall as well as rise, so you may get back less than you invest. It’s important to understand that pension transfers are a complex area and may not be suitable for everyone. Before going ahead with a pension transfer, we strongly recommend that you undertake a full comparison of the charges, features, and services offered.
To find out what else you should consider before transferring, please read our Fidelity SIPP transfer factsheet. If you are in any doubt whether or not a pension transfer is suitable for your circumstances we strongly suggest that you seek advice from an authorised financial adviser.
This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.
The value of investments can go down as well as up, so you may get back less than you invest. This information is not a personal recommendation for any particular product, service or course of action. Pension and retirement planning can be complex, so if you are unsure about the suitability of a pension investment, retirement service or any action you need to take, please contact Fidelity’s Retirement Service on 0800 084 5045 or refer to your financial adviser. Eligibility to invest into a SIPP depends on personal circumstances and all tax rules may change in future. Pension money cannot usually be withdrawn until age 55.