40 years plus Pension

Now that you’ve reached your forties, it represents a great time to review your pension investment strategy. At this stage you’re about half way to retirement, which means it could be a good idea to alter the way you approach your pension. Statistics show that we’re all living longer lives. Although it’s fantastic news, this newfound longevity means that we’ll all need a bigger retirement fund to support us in our autumnal years.

You are now at the perfect age to give serious consideration to the value of your current fund and consider the steps you need to take to ensure an adequate retirement saving scheme is in place.

How much do I need to invest in my Pension?

As stated earlier, as much as you can. The government offers generous tax relief on your pension contribution thankfully. Again, the rule of thumb is to invest a portion of your earnings equal to half your age but more if possible.

You can get tax relief on these contributions as follows:

As pensions are designed specifically for retirement, they offer numerous advantages that other savings plans don’t.

  • Your fund grows in a tax-efficient manner as no capital gains tax are applied to growth.
  • The money you pay benefits from the levels of tax relief outline above.
  • Your pension fund cannot be accessed until you’re at least 60 (unless you have a company pension, which may differ), meaning that no matter how tempted you get, you can’t dip into your fund. This is ideal as everybody occasionally has a moment of weakness.

What range of funds can I choose from?

The range of investment options available to pension fund investors has increased dramatically in recent years.  In addition to the assets classes of property, shares, commodities (such as oil and gas) or fixed-interest funds we now have the choice of Market Neutral, Currency and Multi-Asset funds.

You can choose which asset class / fund to invest within the range available from your provider.  Life companies now offer a range of funds to suit all investors and appetite for risk.

What amount of investment risk you are willing to take?

All investments have an unavoidable amount of risk involved. The value of investments can rise and fall, you may get back more than you invested, but you may also get less. The more risk you are willing to take, the higher chance of potential return, but there’s also a higher chance of loss. Lower risk investments offer a safer alternative but have lower potential returns. You need to choose which investment suits your risk tolerance and your needs. Fortunately, we here are UFS are happy to help. Think about how you feel about the risks associated with investing. Everyone’s situation is different, and everyone handles risk differently. With our help, you can decide how much risk you are comfortable with.