After a long, bleak winter and a rainy spring, summer not only brings hope of sunnier days but also hope of a better financial future. With inflationary pressures receding and the economy showing signs of growth, it could be a good opportunity to prioritise some pension-related matters to ensure brighter days really do lie ahead.
Be clear about your wishes Did you know almost half* of all UK pension savers have not thought about who will inherit or otherwise benefit from their retirement savings? It is therefore extremely concerning that the same research also highlighted that over half of respondents had not completed an expression of wishes form (this form tells your pension provider who should receive your pension savings if you die before you retire). A further one in ten were unaware if their forms were up to date.
Time to boost the pot?
Financial Conduct Authority data covering 2022/23 highlights the financial difficulties experienced by people over the past few years, with the number of pension plans accessed for the first time increasing by 4.8%. However, as challenges ease, it is hoped that people will focus on boosting their retirement pots.
Pass it on
While the tax advantages associated with pension contributions are often appreciated, what can be overlooked is their potential to pass on wealth tax-efficiently. Pensions can play an important role in supporting your loved ones after you pass away. They can also be used to deal with the Child Benefit trap, because pension contributions reduce taxable income, thereby enabling some people to avoid paying the Child Benefit Charge.
Devote some time
Understanding the value of investing time in your pension now ensures benefits in the future. Talking through your options will help you maximise your pension benefits, for you and your beneficiaries.
*Canada Life, 2024