Morningstar's Guide to Maximising Your Pension

As we look to the beginning of the new tax year, and the one year anniversary of pension freedoms, we bring you the ultimate guide to retirement saving

Emma Wall 4 April, 2016 | 10:41AM
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It has been 12 months since pension freedoms were introduced; One year since retirement savers aged 55 and older were able to get their hands on their pension cash. Have George Osborne’s radical reforms been a success? Or has the scrapping of compulsory annuity purchase left a Guinea pig generation of DIY pension investors fast haemorrhaging cash that was hard earned over decades?

Sanlam UK’s Which Way Forward? Report reveals that despite the swathes of publicity and offer of free guidance from the Government, one in three workers aged 60 and older do not know the implications of the changes.

Nick Parry, Sanlam UK, said: “The pension freedoms introduced last year were intended to give people real choice over their money and savings. But far from being enlightened, our research finds that a significant proportion of the non-retired population are completely disengaged with the reality of their future, and it is really concerning that over half haven’t considered financial planning for retirement.”

Worse still are the findings of the People’s Pension – that many people plan to withdraw all of their pension pot and “investing it in cash ISAs”. Cash is still the only well-known asset to many pension savers despite nearly a decade of record low interest rates, and the unknowns of the stock market, coupled with mistrust of the pensions and investment industry is driving people towards high-street savings accounts.

There are changes afoot this week for those still saving for retirement too. Currently pension savers can invest £40,000 a year in a pension scheme and £1.25 million over their lifetime – but the lifetime allowance is set to fall to £1 million on Wednesday. Higher earners especially need to top up now as after April 6th their annual allowance will be tapered too, with those earning more than £210,000 allowed to invest just £10,000 in a pension a year.

Add to that the introduction of the lifetime ISA, volatile markets – and the rumour that the proposal for pension ISAs may not have been scrapped forever and you can understand how investors may be confused. But with these changes in mind, is stepping up to help investors make sense of the shifting goal posts. All this week we will be running a Guide to Maximising Your Pension, helping investors build up the maximum possible pension pot – and turn it into the maximum possible retirement income.

Monday: What is a Pension?

Back to basics education and a clear guide to recent changes

What is a Pension?

What is Pension Drawdown?

How is Your State Pension Changing?

What is Pension Auto-enrolment?

Save £230 a Year by Switching to the Cheapest Fund Platform

Tuesday: Pension Saving as a Young Professional

Lifetime ISAs, how to get started and the types of assets to own

How to Invest in Your 20s and 30s: Get Over the Present Bias

Increase Your Pension Payments When You Get a Pay Rise

How to Save for Retirement

5 Last Minute Stock Picks by ISA Investors

3 First-time Fund Picks for Your SIPP

Young People Worse Off Under New State Pension

Wednesday: Investing in Your 40s and 50s

Balancing school fees, elderly dependents and maximising a pension pot

Investing in Your 40s and 50s: Prioritise Your Pension

3 Main Decisions to Secure a Comfortable Retirement

Drip Feed an Investment to Pay for University Fees

3 UK Stocks for Growth Investors

Thursday: Approaching Retirement

Should you be de-risking?

Should You Take Your Tax Free 25% Pension Lump Sum at 55?

Selling Equities in the Run Up to Retirement

Investor Views: "Selling is Always More Difficult Than Buying"

Investors Rush to Snap Up Gold Funds as Price Bounces

Friday: Investing Post-Retirement

What changes once you stop working?

How Income Investing Has Become Significantly More Risky

3 UK Equity Income Funds for Your Post-retirement Portfolio

How to Invest Post-Retirement

New Tax Year: Act Now to Maximise Your ISA Gains

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Emma Wall  is former Senior International Editor for Morningstar

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