Your Pension Planning Checklist
Why pension planning for retirement matters
Even if you plan to keep working for several more years, it’s worth reviewing your pensions now. This helps you understand what you’ve built up so far, how your pensions are structured, and what your options will be when you retire.
Risks of delaying your pension review
The decisions you make in the years leading up to retirement can significantly influence your long-term income, tax position, and financial stability. For example, delaying a review could mean missing out on employer contributions, failing to spot underperforming investments, or paying more tax than necessary when accessing your pension.
By building a clear, detailed picture of your current pension arrangements, you will be in a stronger position to decide how and when to retire, and whether your expected income will support your lifestyle throughout later life.
Listing all your pension arrangements
Begin by identifying every pension you hold or are entitled to. This includes:
Workplace pensions
These are pensions both from current employment and any previous jobs. They may be defined benefit pensions (which promise a guaranteed income based on salary and years of service) or defined contribution pensions (which depend on the amount paid in and how the investments perform).
Personal pensions
These include schemes such as stakeholder pensions or self-invested personal pensions (SIPPs), which you may have set up independently if you were self-employed or supplementing other savings.
The State Pension
This is a regular payment from the government based on your National Insurance record. You can claim it from your State Pension age, but the amount depends on how many qualifying years you have.
Many people accumulate multiple pension pots over the course of their working life, especially if they have changed employers frequently.
A person who worked in five different roles over thirty years may have five separate pension schemes, each with its own provider and investment strategy.
Tracing missing or forgotten pensions
If you have lost contact with a pension provider, or cannot recall all your previous schemes, it is possible to recover the details.
The government’s Find Pension Contact Details service allows you to search for workplace or personal pensions using the name of your former employer or pension provider.
This is particularly important if you have moved house, changed your name, or left an employer more than a decade ago. Pension schemes are legally required to hold funds for you, even if you are no longer in contact.
In some cases, forgotten pots can be worth thousands of pounds.
Checking your State Pension forecast
Your State Pension is based on your National Insurance contribution history. To understand how much you are on track to receive, and from what date, you can request a State Pension forecast through GOV.UK.
The full new State Pension is only paid to those with at least 35 qualifying years, although you may receive a lower amount if your record is incomplete. You can also check whether you are eligible to make voluntary contributions to fill any gaps.
For example, someone with 28 qualifying years may be able to buy additional years to increase their future entitlement.
Reviewing the value of your pensions
Contact each pension provider to request the current value of your pension pot or the estimated income you may receive in retirement.
- For defined contribution schemes, this will be shown as a cash value.
- For defined benefit schemes, it will often be expressed as an annual income figure based on your years of service and salary history.
Annual statements are typically issued by providers, but you can request an updated value at any time. This information is essential for calculating your projected retirement income and assessing whether it will meet your needs.
A person with three pots worth £60,000, £25,000 and £80,000 respectively may not realise that their combined value is £165,000, a figure that could support a meaningful retirement strategy if managed well.
Understanding where your pension is invested
If you have a defined contribution pension, your money is usually invested in a mix of assets such as equities, bonds, or cash. These investments can fluctuate in value, especially during periods of economic uncertainty.
Review your current investment choices to assess whether they align with your risk tolerance and retirement timeline. For example, someone ten years from retirement might consider shifting from high-risk growth funds into lower-risk options to protect against market downturns.
Conversely, someone with no immediate need to access their pension may choose to remain in higher-growth investments for longer.
Many schemes offer default funds, but you are not obliged to stay in them. Reviewing your options does not mean you have to make immediate changes, but understanding your current position is essential.
Estimating your future income needs
Planning for retirement involves more than just knowing what you have saved. You also need to estimate how much income you will need to live on.
This includes essential expenses such as mortgage or rent payments, council tax, utility bills, food, and transport. It should also factor in non-essential costs such as holidays, hobbies, gifts to family, or private healthcare.
One practical method is to record your current monthly spending, then assess how each category might change in retirement. For instance, commuting costs may disappear, but heating bills may rise if you spend more time at home.
If you expect to pay off your mortgage before retirement, that could significantly reduce your required income.
Thinking about your preferred retirement age
Although the State Pension age is fixed by government policy, currently 66, rising to 67 between 2026 and 2028, you may wish to retire earlier or later depending on your financial position and personal circumstances.
Deciding on a general retirement age, even as a range (for example, between 63 and 67), can help you model different income scenarios. It also allows you to identify any income gap if you plan to retire before the State Pension begins.
For example, someone intending to retire at 63 will need to cover three or four years without the State Pension, which may require drawing down other pensions earlier than planned.
Exploring how to access your pensions
From age 55 (rising to 57 in 2028), you can begin to access most private pensions. The method you choose will determine your income, tax position, and level of flexibility in retirement.
The three main options are:
- Annuity. This provides a guaranteed income for life or a fixed period, regardless of market conditions. It may be suitable for those who prioritise certainty.
- Flexi-access drawdown. This allows you to leave your money invested while taking income as needed. It offers flexibility but carries investment risk.
- Lump sum withdrawals. You can take some or all of your pension pot as cash. The first 25% is usually tax-free, but further withdrawals are added to your taxable income.
Each option has its own features, tax implications, and risks. You can combine them or switch strategies over time, but early withdrawals may reduce your long-term income.
Accounting for tax on withdrawals
When you access a defined contribution pension, the first 25% is usually tax-free. The remaining 75% is taxed as income in the year it is taken.
If you withdraw large sums in a single tax year, you could move into a higher tax bracket. For instance, a withdrawal of £60,000 on top of other income could push you into the higher rate tax band, increasing your liability to 40% on part of the sum.
Carefully managing the timing and size of withdrawals can reduce your overall tax burden. Some people choose to spread withdrawals over several tax years to keep their income within the basic rate band.
Deciding whether to seek financial advice
Some people feel confident managing their pensions without professional advice, particularly if they have a single pot or straightforward plans. Others prefer to consult a regulated financial adviser, especially if they have multiple pensions, large pots, or complex family or tax situations.
Advice can help you understand the implications of your choices, avoid costly mistakes, and create a long-term income strategy. While advice comes with a fee, typically charged as a percentage of your pot or as a fixed cost, it may deliver long-term value through improved outcomes or tax efficiency.
Reviewing your pensions regularly
Once you have completed your initial review, it is important to revisit your pension arrangements at least once a year. Circumstances change, including job status, investment performance, government policy, and personal goals.
For example, if you stop working earlier than planned or inherit a sum of money, your pension strategy may need to adapt. Similarly, changes in interest rates or inflation may affect how much you can sustainably withdraw in retirement.
Keeping your records up to date and tracking your pension values over time will make it easier to adjust your plans when necessary.
Monitoring your plan over time
Pension planning is not a one-time task. It is a process that should evolve with your life. A new job, changes in health, moving house, divorce, bereavement, or shifts in the economy may all require you to reassess your approach.
Many pension providers now offer online access or mobile apps, making it easier to view your pension balances, update your details, and track investment performance in real time.
Small annual adjustments, such as increasing contributions, rebalancing investments, or revising your retirement date, can have a significant impact on your long-term position.
Where to find information and support
If you are unsure about any part of your retirement planning, there are reputable sources of help available:
- MoneyHelper, a government-backed service, offers free, impartial guidance on pensions, savings, and retirement income.
- GOV.UK provides access to official tools, calculators, and forms related to pensions and tax rules.
- The Find Pension Contact Details service can help you locate lost workplace or personal pensions using your previous employer’s or provider’s name.
These resources do not offer personalised financial advice, but they can help you understand your options and gather the information you need to make informed decisions. For tailored recommendations, it is always best to speak with a regulated financial adviser.
Frequently asked questions
What age should I start reviewing my pensions?
You can begin reviewing your pensions at any time, but it becomes especially important from age 55 onwards. This is when most private pensions become accessible, and your decisions can directly affect your long-term income and tax position.
How can I find old pensions I’ve lost track of?
You can use the government’s Find Pension Contact Details service to search for old workplace or personal pensions using your former employer’s or provider’s name.
Is it worth getting a financial adviser?
It depends on your circumstances. If you have multiple pension pots, a high-value fund, or complex tax or family considerations, regulated advice may help you avoid costly mistakes and optimise your retirement income.
Can I access my pension before State Pension age?
Yes. Most private pensions can be accessed from age 55 (rising to 57 in 2028). However, accessing them early can reduce your long-term income, and withdrawals may be taxed depending on the amount taken.
How much do I need to retire?
There is no fixed amount. It depends on your expected lifestyle, existing savings, and retirement age. A good starting point is to estimate your future expenses and compare them with your projected income from all sources.
What happens if I take too much from my pension?
Taking large withdrawals in one tax year can push you into a higher tax bracket. It can also reduce your income in later retirement. Spreading withdrawals over multiple years can help manage both tax and sustainability.
