If you’re beginning to think about your retirement, we’d forgive you if you had experienced some sleepless nights in recent times. After all, UK household savings recently plunged to historically low levels, falling from 5.6% to just 5.2% during the third quarter of 2017. This means that citizens are finding it almost impossible to accumulate wealth during traditional means, while the so-called safety net of state and workplace pensions are also being squeezed in a challenging economic climate.
Being Smart with your Pension – How to Build for the Future
With this in mind, it’s crucial that you focus on optimising your pension savings in the current climate, as you look to accumulate wealth and safeguard your financial future post-retirement. Here are some steps that you can take to achieve this:
- Consolidate your Pension Savings
While it used to be common for workers to remain in the same job role for decades, this is no longer the norm in the contemporary labour market. In fact, UK workers now change roles every five years on average, and this number is continuing to fall with every passing year.
This will leave you with a number of active, workplace pensions, however, which can make it hard to manage your accumulated savings and make the most of these.
So, it makes perfect sense to consolidate these funds within a single, accessible pension plan. This means that you can manage your pension savings far easier, while optimising any potential returns that you hope to access in the future.
- Consider the Benefits of SIPPs
If you’re going to consolidate your funds in a single place, you should consider opening a self-invested personal pension (SIPP). After all, this type of plan not only enables you to take control of your finances, but it also offers you access to a host of generative asset classes across both domestic and international markets.
With service providers such as Bestinvest, it’s also relatively easy to transfer your existing plans into a SIPP and benefit from all of the associated tax advantages.
The key is to work closely with your chosen provider in order to create a profitable portfolio of assets, as this means that the process of collating and transferring your funds is ultimately worthwhile.
- Consider the Salary Sacrifice Scheme
When it comes to optimising the value of your workplace pension, the key is to maximise the contributions of your employers.
One way in which you can achieve this is to enter into a salary sacrifice scheme, which requires you to exchange part of your monthly wage for additional, employee benefits. These often include additional pension contributions, which can boost your long-term savings with a small and negligible sacrifice.
Depending on your rate of remuneration, this may also reduce your tax rate and enable you to increase your personal savings over time.