There is over £3 trillion invested in pensions in the UK, combining company schemes and personal style schemes. This is an astonishing sum which encourages us that the UK population has good provision for their retirements.
But this is, on closer inspection, incorrect.
The estimated current total value for every individual combined should be closer to £5 trillion, suggesting that there is a 40% shortfall.
There is a retirement savings gap of £2 trillion. At a UK wide level this is a problem. At an individual level it may be a problem, but there is one big difference between the UK and the individual, it may be difficult to get universal change and improvement but any individual can work to improve their own position.
“Company Pension Scheme deficits reach £8o billion”
(source: Financial Adviser Magazine Nov 2011)
“78% of all personal style pension funds have under-performed”
“To obtain a pension of £25,000 per year the average individual needs to accumulate a total fund of £500,000 by retirement”
And this starts by looking at what you currently have and assessing how good is your current pension?
The improvement that can be made in an individual scheme could be the difference between a poor retirement and a productive one.
Have a look at this: an individual aged 40 with £50,000 in their fund at the present time investing from here to age 65 achieves 5% per year net of charges, they will build a fund of £169,318 by the time they are 65.
Yet if they changed tact, took care and found a great new strategy that obtained 7% per year they would have a fund of £271,371 – over £100,000 more.
And if they could push harder still and get 9% per year the fund value would be £431,154 – over £250,000 more.
Let’s dream, what would the figure look like at 12%? The fund would be £850,003.
The extra percentage returns makes a huge difference, possibly a defining difference.
Of course, the desire for extra returns is a lot easier than actually getting anything extra and there has to be high regard for risk in any attempt at trying to stretch the return, but this does not alter the fact that so many individuals leave their money in pension funds that are proven to fail.
Unlike any other part of the retirement strategy (for example increasing the amount you save on a regular basis) the extra returns you can find are, in a way, free, it costs you no more in savings to eke out that extra return, it may take effort but we think you will agree the effort to get better returns is more than worth it if you succeed.
With so many pensions funds being duds wouldn’t it be a good start to see how your fund or funds are doing and then looking at how you can get more from your existing pot using some form of improved or as we like to call it dynamic pension investment strategy?
Our site exists to help you with both these efforts: to see how your existing fund is doing and then start the process of getting a revised, improved strategy and future return.