The comparison with a car couldn’t be more apposite. After all, if you bought your shiny new machine a few years ago and have never booked it in for an annual once over it’s highly likely to be seriously underperforming. On top of that, without the necessary tweaks you’re probably paying more to keep it crawling along than you ought to be.
The chances are, if you purchased a pension a few years ago and have similarly done nothing with it apart from file the papers away, then you could be in for a nasty shock.
That was then, this is now
However rosy the picture looked when you took the pension out it will certainly have wilted in subsequent years. Only a couple of years ago the Daily Telegraph was reporting that UK pension performance was among the worst in the developed world. Add to that the widely reported practice of private pension firms allegedly hiding fees levied on customer investments and a pension review is perhaps the very least you should treat yourself to.
The big issue
Poverty is an emotive word however it’s worth crunching some numbers to get things into proper perspective.
According to the Office for National Statistics, workers in Britain, on average, want to retire with an income of £24,400 a year. The Joseph Rowntree Foundation estimates the poverty line for a single British pensioner would be £8,254 a year.
The worrying fact is that 75% of those in their 50’s will have a pension pot of less than £50,000 when they decide to call it a day. Generating an annual income some £5,300 below the poverty line, calling it a day with a pension pot this size might not be a viable option.
Time seems to slip by more quickly the older you get and before you know it that once dreamt of retirement day will be looming. Without a review of your pension arrangements, including those frozen ones from a previous job perhaps, those dreamt of days might have to be delayed at worst or at best enjoyed on a lower than anticipated income.
At the risk of overplaying the motor car analogies, if you’ve done nothing with your pension for years, you really need to apply some anti-freeze and oil the wheels to avoid it being worth little more than scrap value.