5 ways to protect your pension pot – however challenging things get – Fidelity International

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Published 11 August 2022
Fidelity International

Important information: The value of investments and the income from them can go down as well as up, so you may get back less than you invest.
SAVING for your future when the current climate is how it is, can feel especially tough. With inflation at a record high, the day-to-day cost-of-living means that few of us are going to avoid feeling a pinch somewhere in our finances.
And when we’re also responsible for protecting our future finances too it gets even trickier. It means we have to effectively wear two hats at once – one when we’re dealing with the day-to-day and keeping a handle on ever-rising costs, and another while simultaneously keeping an equally firm grip on our future financial needs.
It’s no mean feat, but here’s how to do it.
1. Keep up workplace pension contributions
The number one rule in pension planning, whatever the prevailing economic climate, is always the same – don’t ever ditch workplace pension savings.
Not only are contributions taken out of your gross salary beneficial from a ‘here and now perspective’ as they cut your tax bill, but they also attract the key benefit of pension savings – a nice little top-up from HMRC. And, now that employers have to add to the pot, they’re guaranteed to be even more worth your while, giving you additional money from your employer, over and above your salary.
2. Maintain regular savings
Once you’ve maxed out your pension savings you should try to bolster these with additional savings. This doesn’t have to be a large amount. You can open a stocks and shares ISA with as little as £25 a month, and up to £20,000 tax-free annually. By putting away a small amount each month you can soon build up a substantial pot.
3. Look for cost-cuts where you can
If money feels tight, then now is a very good time to look for cost-cuts where you can. It’s a smart time to review exactly what you’re spending money on and where the best deals are. Adopt the same approach with all your weekly/monthly shopping and spending habits and you’ll find that taking control of your spending should give you that little extra you need to boost your longer-term savings.
4. Use the current situation to your advantage
If we thought sky-high inflation was a thing of the past, the current situation has proven us very wrong. If retirement is part of your plan within the next few years, deciding exactly how you plan to take your retirement income is equally important. Ideally, your plans should allow you to cover the cost of essential spending with income that can rise as prices rise. That could mean using some or all of your pension pot to buy an annuity that offers some protection against inflation or leaving pension money invested via drawdown in assets that have the potential to keep pace with higher living costs.
5. Review but don’t tinker endlessly
The temptation to ‘do something’ at times like this can be hard to resist. But if you do the above then all you really need to be doing is making sure you have a clear understanding of how you want your retirement to look and how you’ll financially achieve it. The biggest risk is falling far short and not being able to realistically afford your desired lifestyle. It’s critical to make your savings work their hardest for you, so you can ensure you have the best chance of retiring and getting the life you want.
The Government’s Pension Wise service offers free, impartial guidance to help you understand your options at retirement. You can access the guidance online at www.moneyhelper.org.uk or over the telephone on 0800 138 3944.
Fidelity’s Retirement Service also has a team of specialists who can provide you with free guidance to help you with your decisions. They can also provide advice and help you select products though this will have a charge.
Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Tax treatment depends on individual circumstances and all tax rules may change in the future. The minimum age you can normally access your pension savings is currently 55, and is due to rise to 57 on 6 April 2028, unless you have a lower protected pension age. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.
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Take control of your retirement savings and get your money working harder with the Fidelity SIPP.
The Fidelity retirement service can help you plan for your retirement and choose an income that meets your needs so your money lasts.
Our team of advisers can help you achieve your investment goals, whether those relate to one-off events or more complex needs with ongoing support.
Please remember that past performance is not necessarily a guide to future performance, the performance of investments is not guaranteed, and the value of your investments can go down as well as up, so you may get back less than you invest. When investments have particular tax features, these will depend on your personal circumstances and tax rules may change in the future. This website does not contain any personal recommendations for a particular course of action, service or product. You should regularly review your investment objectives and choices and, if you are unsure whether an investment is suitable for you, you should contact an authorised financial adviser. Before opening an account, please read the ‘Doing Business with Fidelity’ document which incorporates our client terms. Prior to investing into a fund, please read the relevant key information document which contains important information about the fund.

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