How Often Should I Review My Pension?

Why review a pension at all?

Because your pension might be running for:

20

30

40

or more years.

During that time:

your life changes.

You may:

• change jobs
• earn more
• earn less
• marry
• divorce
• have children
• receive an inheritance
• move house
• build other savings
• change your retirement date
• or: change what retirement means to you.

Meanwhile the pension can change too.

Its:

• value
• investments
• charges
• fund structure
• and: retirement projections

can all move over time.

A pension selected at 35 should not simply be assumed to remain perfectly aligned with your life at 55.

Does annual review mean annual switching?

Absolutely not.

This is an important distinction.

You can review a pension and conclude:

"No change required."

In fact, regularly changing investments merely because another fund performed better recently can be harmful.

We covered that in:

Should I Change My Pension Investments?

Review means:

look

understand

compare with your plan

then:

decide whether action is needed.

It does not mean:

find something to fiddle with.

Steve's observation

Some people approach an annual pension review like an MOT.

If the adviser doesn't change three things, they assume they didn't get their money's worth.

Sometimes:

"Everything looks fine. Carry on."

is a very useful answer.

What should I review every year?

Start with the basics.

1. What is my pension worth?

Record the current value.

Then compare it with the previous year.

But remember:

an increase in pension value can come from:

new contributions

and:

investment returns.

So if your pension moved from:

£80,000

to:

£92,000

and £8,000 was contributed during the year, that is not automatically a 15% investment return.

We covered reading pension statements in:

How Do I Understand My Pension Statement?

2. How much am I contributing?

Check:

• your contribution
• your employer's contribution
• and: the total being added.

Then ask:

"Is this still enough for the retirement I'm aiming for?"

A contribution level that looked reasonable five years ago may no longer be enough if:

• your retirement objective has changed
• or: your intended retirement age has moved earlier.

Equally, your income may have increased and you may now have more capacity to save.

We cover that decision in:

Should I Pay More Into My Pension?

3. Am I getting the employer contribution I expect?

If it is a workplace pension, check that:

your contributions

and:

your employer contributions

are being received correctly.

If your employer offers higher matching contributions at different contribution levels:

check whether anything has changed.

Do not assume the scheme you joined ten years ago still operates exactly as you remember it.

4. What am I invested in?

Find the actual fund or funds.

Then check:

• investment objective
• asset allocation
• risk
• and: whether the investment approach still makes sense for your timeframe.

We covered this in:

What Is My Pension Invested In?

If you genuinely cannot explain broadly what your £150,000 pension is invested in:

that is worth fixing.

5. How much risk am I taking?

Risk is not static.

Your:

• time until retirement
• other assets
• income needs
• capacity for loss
• and: retirement plans

can all change.

An investment approach that made sense while you were 25 years from retirement may need reviewing when you are three years away.

But:

getting older does not automatically mean "move everything into low-risk investments."

How you intend to use the pension matters too.

Someone planning to remain invested through pension drawdown may still have a long investment timeframe.

We explain this in:

How Much Risk Am I Taking With My Pension?

6. How has my pension performed?

Performance matters.

But review it in context.

Ask:

• What was the fund trying to achieve?
• What risk did it take?
• How did appropriate comparators behave?
• What time period am I looking at?

Do not turn your annual pension review into:

"Find whichever fund went up most and move everything there."

That is performance chasing.

We covered this properly in:

Is My Pension Performing Well?

7. What am I paying?

Check charges.

That might include:

• pension administration
• platform charges
• fund costs
• transaction costs
• and: advice charges where applicable.

Charges matter because they reduce the amount remaining invested.

But:

cheapest does not automatically mean best.

A pension also needs to be judged on what you receive for the cost.

We covered this in:

How Much Am I Paying in Pension Charges?

8. Does my pension contain valuable guarantees?

If you have older pensions, do not assume you checked this once and can forget it.

Keep a permanent record of any:

• Guaranteed Annuity Rates
• protected tax-free cash
• protected pension ages
• Guaranteed Minimum Pension rights
• defined benefits
• or: other guarantees or safeguarded benefits.

If the pension has something valuable:

make sure future decisions take account of it.

Read:

Does My Pension Have Valuable Guarantees or Benefits?

9. Is my selected retirement age still correct?

This sounds minor.

It can matter enormously.

Some pensions use your selected retirement age when:

• producing projections
• and: automatically changing investments through lifestyling.

If your pension thinks you retire at:

60

but you now intend to retire at:

67,

the investment strategy or projections might no longer line up with your plan.

Check it.

10. What does my retirement projection say?

Your annual statement may include an estimate of what the pension could provide later.

Treat it as:

a planning illustration.

Not:

a promise.

Projection assumptions can differ between providers and can include assumptions about:

• future contributions
• investment growth
• charges
• inflation
• and: how benefits might eventually be taken.

The useful question is not:

"Will I definitely receive this?"

It is:

"Does this suggest I am broadly on course, or is there a gap I need to investigate?"

11. Have I checked my State Pension?

Your private pensions are only part of the retirement picture.

Check your current State Pension forecast where appropriate.

If you are planning retirement, your overall position could include:

• State Pension
• workplace pensions
• personal pensions
• savings
• ISAs
• investments
• property income
• or: other assets.

Reviewing each private pension individually but never combining everything into one retirement picture is only half the job.

12. Is my beneficiary nomination still right?

This is one of the easiest pension jobs to forget.

Ask:

"If I died today, is the information held by my pension provider still what I would want them to consider?"

Life changes.

You might:

• marry
• divorce
• have children
• lose a partner
• or: change relationships.

Where applicable, update your:

beneficiary nomination

or:

expression of wish.

Do not assume an old nomination automatically reflects your current wishes or determines the outcome in every scheme.

What life events should trigger an extra review?

You do not have to wait for your annual diary date.

Review the pension whenever there is a meaningful change.

Examples include:

• changing employer
• large pay rise or pay cut
• marriage or divorce
• birth of a child
• bereavement
• inheritance
• serious health change
• significant change in retirement age
• starting a business
• selling a business
• accessing pension benefits
• or: major changes to your wider financial position.

Should I review more often when retirement gets closer?

Potentially, yes.

MoneyHelper suggests reviews may need to become more frequent as retirement approaches.

That makes sense because decisions can become more immediate.

You may need to consider:

• actual retirement date
• income needs
• tax
• pension-access options
• investment strategy
• and: whether your existing selected retirement age is correct.

A decision that can wait ten years when you are 40 may need resolving fairly soon when you are 64.

Should I check my pension every day?

Probably not.

You can.

Your app will happily show you every wobble.

But that does not mean it is useful.

Long-term investments move continuously.

Checking too frequently can encourage emotional reactions to normal market movement.

If you have a pension intended to fund retirement in twenty years:

today's 1.2% market fall probably doesn't require an emergency meeting.

Steve's observation

The pension app has made pensions considerably easier to monitor.

It has also made it possible to ruin your breakfast because America had a bad Tuesday.

Use technology.

Don't let it manage you.

What if markets fall sharply?

A major market fall can be a sensible reason to:

review.

It is not automatically a reason to:

sell.

Check whether:

• your risk remains appropriate
• your plan remains viable
• and: anything in your circumstances has changed.

If the pension is intended for long-term investment, recovery may be possible over time, but recovery is never guaranteed.

If you are already withdrawing retirement income, market falls may require more active review because withdrawals can amplify the impact of losses.

We cover that in:

What Happens to My Retirement Income if Investments Fall?

What if I am already in pension drawdown?

Then regular reviews become particularly important.

MoneyHelper currently recommends reviewing both:

the pension value

and:

the amount being withdrawn

on a regular basis, with an aim of at least once a year.

Why?

Because the plan depends on moving variables:

• investment returns
• withdrawal levels
• inflation
• charges
• tax
• life expectancy
• and: your spending needs.

If the pension falls while withdrawals continue:

the sustainability of future income can change.

We cover that in:

How Do I Make My Pension Last Throughout Retirement?

Does an adviser have to review my pension every year?

That depends on the service agreement and regulatory requirements applying to that relationship.

If you are paying for an ongoing advice service:

understand exactly what is included.

Ask:

• How often will my plan be reviewed?
• What will you review?
• What happens between scheduled reviews if my circumstances change?

The FCA has recently consulted on changing some of its detailed ongoing suitability-review rules, including potentially moving away from a fixed annual suitability-review concept towards periodic reviews based on client needs.

At the date of this guide:

those proposals should not be treated as final rules.

For the consumer, the practical principle remains simple:

know what ongoing service you are paying for and make sure it is actually delivered.

Create a Pension Review File

This does not need to become another administrative hobby.

Keep one record containing:

• provider
• policy number
• pension type
• current value
• contribution
• employer contribution
• funds
• risk
• charges
• retirement age
• guarantees/protections
• beneficiary nomination date
• and: last review date.

Then once a year:

update it.

That's vastly more useful than twelve unopened pension envelopes in a drawer.

Your Annual Pension Review

Once a year, ask:

• What is it worth?
• What went in?
• What did my employer contribute?
• What is it invested in?
• How much risk am I taking?
• How has it performed in context?
• What am I paying?
• Do any guarantees or protections exist?
• Is my retirement age still right?
• What does the projection show?
• Is my beneficiary information current?
• Has anything important changed in my life?
• and: "Am I still on track for the retirement I want?"

That final question is the important one.

What Should I Do Next?

Put one date in the diary.

Once a year.

Call it:

PENSION MOT DAY.

Get all your pensions together.

Check:

• value
• contributions
• investments
• risk
• charges
• retirement age
• beneficiaries
• and: your overall retirement position.

If nothing needs changing:

excellent.

If something does:

you have caught it.

That is the whole point.

Most pensions do not need constant attention.

But: "I haven't looked at it for fifteen years" is probably taking the relaxed approach slightly too far.

Steve's observation

You service your car.

You renew your insurance.

You check your boiler.

Yet somehow people can have £300,000 in pensions and say:

"I think it's with Standard Life. Or maybe Scottish Widows. One of those."

Once a year.

Give it an hour.

Find out what you own.

Check what it is doing.

Check whether your life has changed.

Then get on with your life.

That is what a pension review should achieve.

When did you last properly review your pensions? If the answer is: "I genuinely can't remember," start by gathering your latest statements and checking what you own, what is going in and whether it still matches the retirement you're aiming for. If you'd like help bringing all of your pensions into one clear retirement plan, speak to Open Door Wealth.