Our Helpdesk deals with a huge number of questions every day. But some of the most common, are also some of the most important. Read on to find out the top 5 questions we are asked most often, and more importantly, the answers.
#1. “What kind of pension can I expect when I retire?”
It’s extremely difficult to give a definitive answer to this question.
Ultimately it depends on a number of factors: how old you are when you start contributing, how much you contribute, where you are invested, and when you want to retire.
Our online Pension calculator can help you get a good idea of the kind of pension you might expect.
Simply visit the website and enter your details. The calculator gives you an estimated value of your pension when you retire – including the level of income you can expect.
Importantly, it will also let you know how much money you should save now to target your goals in the future.
As a rule of thumb, saving around 15% of your salary every year of your working life is a good target. Tax relief on your contributions – and help from your employer – means that a significant increase in contributions could cost you far less than you might think. Of course, tax rules can change and the exact benefits will depend on your circumstances.
#2. “I’m not sure which funds to choose so I’ve left my pension in the default fund – is this right for me?”
Many people start with the default option because they don’t have enough time or don’t feel confident enough to make their own investment decisions.
Your company pension default fund is designed to be a balanced approach to investing to suit as many people as possible – but, importantly, it cannot be right for everyone.
That’s because everyone’s investment goals are different.
Consider the people you work with – for some, retirement may be a long way off, for others it may be just around the corner. Some people are willing to take on more risk in the hope of getting a bigger pension. Others may be more wary.
Choosing your own investments is a decision that some people shy away from, but it’s important not to. After all, the better your investments perform, the better off you’ll be in retirement.
Our research shows company pension members who chose their own investments achieved higher returns by as much as 3% a year, over the last 5 years. The difference this could make to an average pension pot over 46 years is shown in the graph below.
The example above illustrates the importance of investment performance. In reality, all investments can go down as well as up in value, so you could get back less than you invest. Past performance is not a guide to the future. Assumptions: salary £30,000, starting age 22, 9% contribution, 1% annual charge.
Whilst we can’t tell you which investments to pick, our expert research team have highlighted 3 investment ideas for you to choose from; one is adventurous, one is balanced and one is conservative.
We call them the ‘ABC Funds’.
Whilst these ideas are a useful starting point please note, they’re not personal advice.
#3. “I have old pensions from previous jobs, can I transfer them to my SIPP?”
Yes – it’s free and you can transfer most pensions to the SIPP. But you should always check you won’t lose any valuable guarantees or incur excessive exit fees from your existing provider.
Transferring pensions to one place can make them easier to manage and ensures you won’t lose track of them.
To transfer, first find out more about our charges and read the SIPP Key Features (including the Common Transfer Declaration and Transfer Checklist).
- Transfer online
Most pensions can now be transferred electronically. Just enter your details online and we’ll look after the rest. Please note, you must have online access to transfer online.
- Transfer by post
If you don’t have online access, you can simply download a Pension Transfer Form, complete and return it to our simple freepost address: Freepost HARGREAVES LANSDOWN
If you’ve lost track of a pension, the government’s Pension Tracing Service could help. In the past ten years alone it’s estimated £500m has been tracked down, making a real difference to people’s retirement.
Find out more about the Pension Tracing Service »
#4. “What happens to my pension when I die?”
Any money left in your SIPP when you die can normally be passed to your heirs free of inheritance tax. Any withdrawals they then make will usually be tax free if you died before you were 75. If you die when 75 or older, any withdrawals will be taxed as their income.
When you were first joined to the SIPP, you were asked to complete an Expression of wish Form – this allows you to nominate who you would like us to pay your SIPP to when you die.
It’s not legally binding, but gives us an indication of your wishes and you can change it at any point.
Download an Expression of wish Form »
Download guide ‘What happens when I die »
#5. “How do I view my account online?”
A PIN would’ve been sent to you when you first joined the SIPP – however, this PIN expires in 21 days if not activated (for security reasons).
To request a new PIN, just call our Helpdesk on 0117 314 1795. You can then register online by entering your personal details and choosing your own username and password.
When you’ve set up online access, keeping track of your pension is as convenient as checking your emails or reading a text message.