News & Blog

Inform your pension provider about your anticipated retirement age

7th November 2019

Pension provider Aviva has warned that workers could potentially lose as much as £10,000 by failing to inform them of their anticipated retirement age. Women would potentially suffer the biggest loss.

In the past women could access their state pension aged 60, and men could access it aged 65. However, that has since changed so that anyone under the age of 41 won’t receive their state pension until they are 68 (or older if the threshold gets further increased).

As people have the ability to essentially retire whenever they want, this can mean that people’s savings are either held in riskier investments close to them retiring or are receiving less growth with their savings being moved to less risky investments too early.

The reason why this happens is all to do with a ‘de-risking strategy’, whereby pension providers move savings into lower-risk investments during the run up to your retirement.

If you plan to retire before your noted date and don’t tell your provider, then you are at risk of having your investments kept in more riskier investments up until you retire. If the markets take a turn for the worst just before you retire, you may not have time for your savings to recover in value. Either meaning a loss to earnings or having to push back your retirement date.

On the other hand, if you plan to retire after your noted date your savings will be moved to less risky investments too early and you will subsequently miss out on investment growth and potentially lose out. With your pension being at its largest just before retirement, this is where the most growth could take place.

Aviva’s analysis predicted that an average earner in automatic enrolment could miss out on £4,000 if they plan to retire aged 68, but have their defaulted age set at 65. If, however, your defaulted age is set to 60 and you plan to retire at 68, you could miss out on £10,000 worth of growth. With the way the old state pension age was set this would likely affect more women.

Firstly, check to see when your defaulted retirement age has been set to. Then if you do plan to retire earlier or later than this date, let your provider know either online or by the phone and tell them your anticipated retirement date.

If you are looking for more help and guidance, get in touch with us on 01609 760960. Or arrange a call back and one of our financial advisers will be happy to help.


Reference – BL084 – Nov – 19

Source:

https://www.aviva.com/newsroom/news-releases/2019/09/uk-pension-savers-could-miss-out-due-to-incorrect-retirement-age/

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