All through our lives we’re taught to spend sensibly and put money aside for a rainy day. Whether that’s saving into a piggy bank as kids, or our pensions as we get older, eventually there comes a time to count the pennies and see how much we’ve got saved.
It doesn’t matter if you’ve just started a pension, are close to retiring, or are somewhere in between, it’s important to keep an eye on your pension and check your balance regularly. Unlike a piggy bank where what you put inside stays there until you break it open, a pension balance can go down as well as up, depending on the type of pension you have, how much you’ve saved and how your investments have performed.
Here are our top tips for finding out how much your pension pot is worth and ensuring you’re on track for a comfortable retirement.
Check your pension statement
The easiest way to find out how much your pension is worth is to check your pension statements. Whatever type of pensions you have, you’ll receive an annual pension statement from your provider. In it they’ll tell you how much your pension is currently worth and what it’s expected to pay out at your retirement date. It’ll also tell you which type of pension you have.
Most personal, workplace and private pensions are defined contribution, which means you’re mainly responsible for contributing to your pension and it’s value when you retire will be based on how much money you’ve paid in, how your money’s been invested and how those investments have performed. If you’ve got a defined contribution pension, your statement will explain how your pension’s been invested in the past year and how it’s performed.
The other type of pension is defined benefit and its value is based on your salary and how long you’ve worked for your employer. If you have one of these pensions you might have heard it being called a ‘final salary’ pension, and your statement will tell you if there’s anything else included with it. Sometimes defined benefit pensions can come with additional benefits, such as a guaranteed annuity rate or life insurance.
Of course, to be able to check your pension statements, you’ll need to make sure your pension providers have your current address details. Depending on who your pension provider is and how old-fashioned they are, you might be able to check your pension contributions and balances online.
Check your National Insurance record
If you’ve worked in the UK for a certain number of years you’ll also be eligible to receive State Pension. The amount you’ll get is based on how much National Insurance you’ve paid during your working life. To qualify for the new State Pension you’ll need to have paid National Insurance contributions for at least 10 years, and to claim the full State Pension amount of £164.35 per week (2018/19), it’s 35 years.
To find out how much State Pension you’re on track to receive you can use the government’s State Pension forecasting tool which you can find on the gov.uk website. It’ll calculate how much National Insurance you’ve already paid and how many years you have left until you reach State Pension age. From there you’ll be able to get a State Pension forecast and find out what you’re eligible for and how you can increase it if it turns out that you haven’t paid enough National Insurance. If you’re due to retire soon you can contact the Future Pension Centre and request a full State Pension statement.
Check for any lost pensions
The more pensions you have, the harder it can be to keep track so, even if you think you’re on top of everything, it won’t hurt to use a pension finder. The government has a free tool called the Pension Tracing Service which is a searchable database of pension provider contact details.
You can also contact your old employers to find out information about any pension scheme that was in place when you worked for the company, and then contact the pension providers directly to find out if you were a member of their schemes.
There are also some pension companies who’ll be able to help you locate an old pension, especially if you plan to transfer the balance to them. This can be more straightforward if you’re already planning to transfer your pensions or have several old pensions that you’ve lost track of.
Consider joining the UK’s most-loved pension company
If you’re having trouble managing several pensions, all with different providers, it might make sense to consolidate them into one. That way you’ll have a unified view of your savings, and just one pension balance to manage going forward. That means only one pension provider to deal with and potentially lower fees too.
Before you move your savings, you’ll need to make sure there aren’t any restrictions on your pensions, or special benefits that you could lose if you have a defined benefit pension, for example. Also, if you do have a defined benefit pension pot and it’s worth £30,000 or more, you’ll need to seek advice from an independent financial advisor.
If you do decide to open a PensionBee pension we can help you combine all of your old pensions into a new online plan. You just need to provide the pension provider name and policy number (if you have it to hand). You’ll get a personal BeeKeeper to guide you through the transfer process.
With PensionBee you’ll get an online pension that you can manage anytime and from anywhere, through your favourite device. You’ll be able to see a list of recent transactions and a performance graph showing how your pension investments have performed over time. Existing customers can download our app in the iTunes and Google Play stores, and use it to access their real time pension balance with PensionBee.