Quick answer
Why reviewing matters
A workplace pension is a long-term investment, but that does not mean you should set it up and forget about it. Your circumstances change over time, your salary, your family situation, your retirement plans and your attitude to risk may all shift. Your pension should reflect your current situation, not the one you were in when you first enrolled.
Regular reviews also help you catch problems early, such as contributions not being paid correctly, your fund drifting away from your target allocation, or charges that have increased without you noticing.
What to check in your annual review
A thorough annual pension review should cover the following areas:
- Current pot value, is it growing broadly in line with your expectations?
- Contribution level, are you and your employer contributing the right amounts?
- Fund choice, is your current fund still appropriate for your circumstances and plans?
- Charges, are you paying a reasonable amount? Have charges changed?
- Target retirement date, is it still correct? Has your planned retirement age changed?
- Personal details, are your contact details and expression of wishes up to date?
- Pension forecast, does the projected retirement income still meet your needs?
Checking your pension forecast
Most pension providers offer a forecast tool that estimates the income your pension might provide at retirement, based on current contributions, assumed investment growth and your target retirement age. This is a useful planning tool, but it is based on assumptions, actual returns may be higher or lower.
When reviewing your forecast, consider whether the projected income is sufficient for your retirement plans. If it is not, you may need to increase contributions, extend your working life or adjust your retirement expectations. The earlier you identify a shortfall, the more time you have to address it.
Steve's observation
The annual pension statement is one of the most important financial documents you receive each year, and one of the most commonly ignored. I regularly meet clients who have never opened their pension statement, and are then surprised to find their pot is much smaller than they expected.
The statement tells you everything you need to know: the current value, the contributions paid in, the investment performance and a forecast of your retirement income. Spending 20 minutes reading it once a year is one of the most valuable things you can do for your financial future.
Reviewing your fund and charges
Check which fund your pension is invested in and whether it is still appropriate. Consider whether your risk tolerance has changed, whether your planned retirement date has shifted and whether the fund's strategy is aligned with how you plan to access your pension.
Also check the charges you are paying. If charges have increased or if you have found a lower-cost alternative, it may be worth reviewing whether a switch is appropriate. Remember to consider the full picture, including any exit fees or loss of benefits, before making changes.
Updating your personal details
Make sure your contact details are up to date with your pension provider, particularly your address and email. Also review your expression of wishes, the form that tells your provider who you would like to receive your pension benefits if you die before taking them.
Your expression of wishes is not legally binding, but pension providers and trustees take it seriously. If your circumstances have changed, for example, you have married, divorced or had children, make sure your expression of wishes reflects your current wishes.
When to consider making changes
Not every review will result in changes, and that is fine. The purpose of a review is to confirm that everything is on track, not to make changes for the sake of it. However, consider making changes if:
- Your contribution level is no longer appropriate for your retirement goals
- Your fund choice no longer reflects your risk tolerance or retirement plans
- You are paying significantly higher charges than comparable schemes
- Your personal details or expression of wishes are out of date
- You have old pensions that could benefit from consolidation
- You are approaching retirement and need to start planning how you will access your pension
Pause for thought
- When did you last review your pension? Have you read your most recent annual statement?
- Do you know the current value of your pension pot and whether it is on track for your retirement goals?
- Is your expression of wishes up to date? Does it reflect your current family situation?
- Do you have any old workplace pensions that you have not reviewed recently?
Coaching point
Key terms
Frequently asked questions
What to do next
Schedule your annual pension review if you have not done one recently. Log in to your provider's portal, read your latest statement and check the key areas covered in this guide.
Guide 12 moves into the Changing Jobs section, explaining what happens to your pension when you leave an employer.