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  • How accurate are pension forecasts?

    I stopped paying into a higher education pension a couple of years ago, aged 50 and could draw it when I am 55. However, would the estimates be quite reliable given the impact of Covid although I set the investment risk as low? Any insights would be appreciated.

    Posted by Christine Twigg
    • Reply by mel

      Hi Christine, it’s really difficult to say as some argue the true economic impact of Covid has yet to be felt, especially as the government furlough scheme will continue until September. However, projections shown on your pension statement should only really be considered a rough guide rather than an accurate forecast of what you will actually receive as no-one knows what future investment returns will be. Your best bet is probably just to keep in touch with your pension provider and regularly ask for a pension valuation so you can see how your pension is performing. Unfortunately we can’t give specific financial advice, but you might find this article helpful https://restless.co.uk/money/retirement-planning/preparing-for-retirement-your-six-step-pension-checklist/

      • Reply by Christine Twigg

        Thanks Mel. Yes I keep in touch with them but still wonder how accurate the estimates are as they do affect planning. I already read the article which was very helpful and will be contributing to the focus group.

    • Reply by SelsdonLion

      I think they should be reasonably reliable if you’ve selected low risk. Obviously the closer you get to when you want to draw the pension the more accurate it will be! As you get closer to 55 you’ll be able to decide whether you want to take it then or leave it for another year or two.

      • Reply by Christine Twigg

        Thanks. I hope it will not be affected too much and I hope to be able to take it as I don’t think it will make much difference being invested with no further contributions being added.

    • Reply by Chris Roberts

      To be honest the markets have recovered and in most cases surpassed the fall as a result of Covid. You are however in a low risk investment which should therefore predominantly be in cash and bonds rather than stocks and shares. This means the impact of market movements would not really have affected you.
      You should get a statement each year showing how your pension has performed. It gives an accurate valuation at a point in time. So depending on when you received the valuation (if recent) it should be realistic.
      Hope this helps.

      Chris Roberts (Financial Coach)

      • Reply by Christine Twigg

        Thanks Chris. That’s good to know about the markets. I do receive a statement every year but it’s not the easiest to understand and I have to work out a 40% deficit each time as I wish to take it at 55 so a lot earlier than usual.

        • Reply by Chris Roberts

          No problem.

          Pension wise is a great source of information for the over 50s Christine. I’m a financial coach and offer a full guidance session for just £75 taking account of a persons whole financial situation regardless of wealth.

          I often direct people to the free service that is pension wise.

          Happy to speak if you wish to explain the service further.

          Either DM me here or email on [email protected]

          Happy to talk you thru what we do for free! 😀

        • Reply by Christine Twigg

          Thanks Chris. I’ll probably start looking at the numbers properly when I have done my 35 years NI contributions and am nearer to 55. I will keep you in mind. Thanks.