5 really important times to review your pension and investments

Typically, the start of a new year is the ideal time to assess your pensions and investments as part of a financial review. It provides an opportunity to look at their performance in the previous year, check whether they’re on track to achieve your financial goals, and identify ways you may be able to increase their growth potential.

It might be that the start of the year is when you normally assess your financial strategy, but there are other times when reviewing your investments and pensions might be a shrewd idea. Doing so at these times could help boost growth potential, ensure you’re as tax-efficient as possible, or help you avoid a financial decision you later regret. 

So, if you’re wondering: “should I carry out a review of my investments and pension?”, read on to discover five times you probably want to consider it, and how a financial planner could help.

1. You’re dealing with a life change

Whether planned or not, significant life changes can have an effect on your wealth, which includes your investments and pensions. These events could include:

  • Having children
  • Getting married
  • Getting divorced
  • A major promotion at work or a new job.

Having children, for example, may mean you stop working full-time to bring them up. As a result, you may not continue to make pension contributions at the same level as you have been previously.

This could reduce the value of your pension pot when you eventually retire and may reduce your standard of living when you stop working. Speaking to a financial planner could help you understand your options so that you can keep your pension on track, allowing you to enjoy the retirement lifestyle you want no matter what the future holds. 

2. You’re paying more Income Tax

According to the Telegraph, millions of workers may be liable to the 40% higher rate of Income Tax after the chancellor froze the threshold at £50,270 until 2028. As salaries are likely to increase because of the rising cost of living while the tax threshold remains static, it’s expected that many workers will be pushed up into the higher-rate tax band.

If you’re one of them, a financial planner might be able to help reduce your liability back down to the 20% basic rate of Income Tax. If you’re a high earner, a planner may also be able to reduce your liability from the 45% additional rate of tax back down to the 40% higher rate. 

One way a planner may be able to achieve this is through “salary sacrifice”. This is where your employer agrees to reduce your salary in exchange for them making higher contributions to your workplace pension. 

While this could provide tax benefits, salary sacrifice also carries risks. For example, it could reduce your ability to secure a mortgage or reduce any death-in-service benefits you may have. This is why it is important to speak to a financial adviser who will be able to confirm whether it’s right for you. 

3. You’re approaching retirement

A study by retirement specialists Just Group reveals that 53% of pensioners who accessed a defined contribution (DC) pension – otherwise known as a “money purchase scheme” – for the first time in 2021/22 did so without financial advice.

Doing this could result in you paying too much Income Tax on your retirement earnings, or even worse, could mean that you exhaust your pension pot earlier than expected. Working with a financial planner as you approach retirement can help you understand the level of income you can draw from your pension pot without inadvertently depleting it.

This could ensure that you can enjoy the lifestyle you want in retirement, safe in the knowledge that you are financially secure. Furthermore, a planner could help ensure that you take your income in the most tax-efficient way possible.

If your pension pot will not support the lifestyle you want, a financial planner could also provide options to help get it on track to achieve your retirement goals.

4. You fear that your investment fees are high

If you’re worried that the fees associated with your pension pot or investments may be excessive, a financial planner could help. They can explain how much you’re paying, the level of growth your money is enjoying after fees have been taken, and whether this is affecting your pension or investment’s ability to meet your financial goals.

A planner can also confirm whether switching to another pension or investment provider could help boost your money’s growth potential. As a result, you may be able to achieve your aspirations earlier than expected.

5. You’re interested in “sustainable” funds

The effects of climate change are becoming increasingly apparent. According to the Guardian, provisional figures by the Met Office reveal that 2022 was the UK’s warmest year ever. With this in mind, you might be looking to switch to Environmental, Sustainable, and Governance (ESG) funds, which aim to reduce businesses’ impact on the planet.

If this is something you are considering, a financial planner can review your investments, pensions, and wider financial strategy to confirm whether switching to ESG funds is right for you. Furthermore, they can help you avoid “greenwashed” investments, which is where companies held within ESG funds have made unsubstantiated or misleading claims about their sustainable credentials.

Reviewing your financial strategy with an adviser provides peace of mind that you could achieve your financial and lifestyle goals while you’re doing your bit for the planet.

Get in touch

If you’re wondering: “should I review my investments, pensions, or financial strategy?”, I would be happy to discuss it with you. Please email me at a.douglass@grosvenorconsultancy.co.uk or telephone 01793 766 123, and I’ll be happy to help. Alternatively, call my mobile on 07525 177 046. 

Please note that while I offer high standards of service and ensure any solution I recommend is right for you, I’m also a busy mum, so work Mondays and Tuesdays only.

Please note

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

Tax levels and reliefs could change and the availability of tax reliefs will depend on individual circumstances.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation, and regulation, which are subject to change in the future.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

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