Pension saving can be undertaken in a number of ways to provide multiple income streams for when a person chooses to finish their working life. The State Pension is provided by the government and is often considered as an income safety net to help with the cost of retirement. However, many Britons accumulate a number of workplace or private pensions throughout their lifetime.
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These streams of income are provided, in part, by an employer who contributes to employees’ pension pots as a form of reward for service.
The law now dictates every workplace should offer a pension scheme by law, however, it is easy to rack up a number of schemes throughout one’s working lifetime.
But how can savers keep track of multiple pensions to be able to claim the full amount to which they are entitled upon retirement?
Express.co.uk spoke to Peter Wood, Partner at Prudential Financial Planning, who provided more insight into the matter, and developments in the pipeline which could help many Britons.
He said: “At this time, tracking a range of pension will involve multiple statements. Or, if you have a financial adviser, they can track for you.
“The government has been working with the industry to develop a Pensions Dashboard. This will allow clients to see all of their pensions, including their state pension, online, and will therefore make tracking pensions a lot easier.
“Having one central pension can make life easier, however financial advice should always be taken before switching.”
Mr Wood stated this advice would allow pension savers to understand if any potentially valuable benefits could be lost on transfer.
He added this option also assists in individual circumstances such as charges, fund choice and flexibility.
However, some may decide multiple pension arrangements are still the best option for them.
In this case, Mr Wood stated there is a potential benefit to be had from keeping this arrangement.
Mr Wood said it is possible for those who have more than one pension to obtain a 25 percent tax-free drawdown on each pension arrangement.
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An income drawdown allows savers to take income from their pension fund while the pot remains invested.
This allows withdrawals, whilst helping the pension to continue to benefit from investment growth.
And Mr Wood pointed out a key tip which could help savers.
He stated the tax free drawdowns can be obtained from different pensions at different times.
This may help those who run into difficult circumstances at various times of life, or just need an extra boost in cash.
For those who may have lost track of pensions throughout their lifetime, the government has provided a helpful tool.
The Pension Tracing Service allows pension savers to find contact details for personal or workplace pension schemes.
While the service does not provide information on the value of the pension, or whether someone has a pension, it can assist with contact information.
Developments Mr Wood mentioned are likely to help pension savers to keep track in a more efficient way.
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