How to start a private pension

Feb 10, 2021Pensions

Starting a private pension can help boost your retirement savings for the future. Most employees now have the option of paying into an auto-enrolment pension scheme through their employment, with minimum contributions at around 8% per year, shared between the employee and employer. In this article, we’ll go over the steps on how to start a private pension.

It is important to check, before starting a private scheme, whether matching is available on your own current auto-enrolment scheme. This means that if you increase your contribution into the auto-enrolment scheme, your employer may also increase the amount they invest into the pension.

If matching is not available and you would like to start your own private scheme, one of the first steps is to decide on how much is affordable for you to invest, either as a lump sum or regular contribution. You can request our budget planner to help calculate how much income you have spare at the end of the month.

There are many different types of pension scheme to choose from, for example a standard personal pension or a Self-Invested Personal Pension. It is important to take professional financial advice to help guide you through this maze of options to ensure you choose the correct scheme to suit your needs.

The next step is to decide on your investment strategy, including how much risk you are comfortable in taking, how long you are investing for and what funds or assets you wish to invest in. If you are not an experienced investor or have limited knowledge in this area, taking financial advice can help to simplify this complex area. There are thousands of options to choose from and it’s important to make the right decisions, as the strategy will have a direct impact on the performance of your funds.How to start a private pension

Reviewing your pension on a regular basis will also help you stay on track to meet your goals. A review should consist of; the performance of the funds, the economic outlook, whether your risk strategy is still suitable and whether your fund is on track to provide you with the income you require at retirement, as well as many other areas of analysis which a financial adviser can help you with.

Generally, most people do not review their pension funds frequently enough and often wait until it is too late to take advice or make changes. Calver Wealth Management can help to manage and monitor your pension to keep things on track for you over the longer term to help provide you with the retirement you desire.

To find out more on how we can help you start your private pension, please see our Planning for Retirement page.

The value of a pension with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.