How to make the most of your pension fund

Make the most of your pension fund

is the title of the workshop that we are running this morning at the Cranleigh Arts Centre.

Examining the many aspects of both building and taking benefits from a pension fund it is timely that The Times yesterday reported details of the report published by LV =.

Apparently “most over 50s are planing to use their property to prop up their retirement”.

This really  shouldn’t come as much of a surprise.

Since the mid 1980s conventional pension provision in the UK has been under tremendous pressure.

These are not excuses (although some who should have saved more for their retirement certainly made a discretionary decision not to) but the reality of living in modern Britain.

Most of the damage has been caused by constant political meddling in the system, few politicians would agree that they are at fault but then they can fall back on their rather nice final salary pension scheme can’t they?!

The factors that cause such chaos include the constant changing of the rules, for example the State pension system, stealth tax attacks on pension fund values, the  politics of envy against those with substantial earnings and funds, government monetary policy driving down Gilt yields and thus the annuity rates that most people still use to convert pension funds into income, have all contributed to the decline.

In addition the fact that we have a population living so much longer has driven up the cost of providing a half decent pension that will enable the pensioner to live well for many years post work.

It used to be said that a person’s pension fund was their second largest asset after their home.

Well it seems now that the home is probably becoming the largest asset and the one on which they will depend in retirement.

Using property as a pension fund can indeed work but be aware that with all financial decisions there are advantages and disadvantages and they need to be given equal weighting.

If your goal is to downsize or use equity release to support your pension income you will need to be confident that the property market will be able to support this approach.

If you cannot sell your home and find a suitable smaller replacement or indeed do qualify in some way for equity release then you may find that your strategy is faulty.

After all you won’t be able to eat the bricks and mortar that make up your home!

Like with all financial planning a strategy based around good long term savings and investments in a diverse range of products makes real sense.

Don’t rely 100% on saving in a pension fund but also don’t rely 100% on a property portfolio.

All our experience tells us that those retiring with a lot of different types of assets stand the best chance of achieving the retirement lifestyle that they want.