Pension: Achieve ‘financial security’ with ‘safer’ retirement income | Personal Finance | Finance


Retirees could secure themselves a guaranteed income for life via an annuity and give themselves one less thing to worry about once they have finished work. However, this will not be right for everyone, and Britons should check whether an annuity would suit them.

Emma Watson, Head of Financial Planning & Advisory Services at Rathbone Investment Management discussed the potential benefits and drawbacks of so-called “safer” retirement income, as well as providing some insight on other considerations for people who are concerned about having a sufficient pension.

Are there any ‘safer’ retirement income options?

“There are ‘safer’ retirement options for those that want to take a more cautious approach,” she told

“Annuities for example, are still an option, though less popular now. Since reforms in 2015 the number of people taking annuities has fallen, especially for those who have larger pensions.

READ MORE: State pensioners could get up to £300 this winter to help with costs – how to receive sum

Knowing what one already has

“If you are in full time employment, chances are you already have a pension through your employer. Under the auto-enrolment rules introduced in 2012, UK employees over the age of 22 (but under state pension age) and earning more than £10,000 before tax each year are eligible to be auto-enrolled into a pension scheme.

“This means that you and your employer could already be contributing to your pension fund. In fact, if you’ve held several roles at different companies, you could have a number of pensions – though you will only currently be contributing to the one started by your current employer.

“If you’re self-employed then the onus is on you to invest in a pension yourself through one of the types of pensions that can be held privately, away from your employer such as a Stakeholder, Personal Pension or a Self-Invested Personal Pension (SIPP).

“Establishing how much you already have saved will help you to understand and plan for saving in the future. If you have multiple pensions, you may consider consolidating these into one pot for ease. The Government’s online service, Money Helper, can help you if you’re unsure how to access your pensions, and their Pension Tracer can help you trace a pension you’ve lost track of.”

Pension contributions

“You should be regularly evaluating how much you are contributing into your pension. We would advise that you look at your contributions each year, and particularly when you see your income increase, as this could mean you have more disposable cash to put away for the future.

“You should also consider whether you are missing any months or years when you did not contribute into your pension.

“This is particularly an issue for women, many of whom will stop contributing to their pension during their maternity leave or career breaks which can lead to women saving substantially less over time.

“However, the Carry Forward rules allow you to make up for those missing contributions. You may be able to carry forward any unused annual allowance, of up to £40,000 from each of the three previous tax years, if eligible and subject to earnings. This means when you are able to contribute once again, you may be able to make up for missing contributions.”

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