Pension Planning - Part Of The Retirement Planning Process

By Author: Martin Cooper
Total Articles: 4
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Pension planning is one part of the retirement planning process. A pension plan is perceived, incorrectly by many, to be the sole mechanism to achieve an acceptable sustainable level of income in retirement. But it will form a core element.

Many people are very pro-active in pension planning, some started off by doing so, and some have become disillusioned as other forms of savings and investment became the priority.

With substantial tax advantages, pension planning is still the most important way of supplementing state benefits on retirement. With employers also offering free contributions, many people often find that they have accumulated funds sitting with different pension companies. Unfortunately, as a recent survey conducted by Baring Asset Management confirmed, over half the working population had even done any pension planning, and only 37% know how their money was invested.

Here are some of the common scenarios financial advisers find:

The vast majority of people who take out a pension feel that their pension planning process is complete, come back in forty years time and they will have ...
... huge big pot of money giving them what they wanted. A bit like buying a car and keeping it for that period of time without servicing it!

They started, and stopped making contributions into a plan with a company that is no longer in existence, or is closed to new business, so that it does not remain competitive.

As the pension was taken out many years ago, the charges might have been exceptionally high as modern day plans have become more transparent, and the rules relating to the giving of advice more consumer orientated.

On the other side of the coin, some of the older plans were started when annuity rates were high, and contain valuable guarantees which should not be lost if pension planning is recommended. Pension Planning processes are only effective when regular reviews occur, and these should become more regular the closer the retirement date.

The credit crunch should have proven to all investors and pension holders the need t oplan thoroughly, review regularly, and take action accordingly. Otherwise, twenty years of pension planning and investment planning will have been to no avail.

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