Last Updated on 10th February 2021

Hopefully, you’ll have put some thought into planning your pension, or you’ll already have started one. If not, you’ll be solely reliant on the State Pension or benefits for your retirement income. 

Maximising your pension is critical, and you need to be aware of a few things that affect your pension. 

Read on to find out about seven little-known factors that can positively or negatively affect your retirement funds.

1. Your Pension’s Growth Rate

Perhaps the most significant factor that determines how much your pension will be worth is its growth rate. It is imperative that you routinely check your pension’s performance so you can assess if it is best to leave your funds where they are or move them elsewhere.

Of course, making such an assessment might be better done through a financial professional. You should consider setting up regular pension checks with an advisor to ensure you are not missing out on pension growth.

2. Single or Multiple Funds

There are situations where you’ll be better off with your pension split between multiple funds and others when a single consolidated fund will perform best. One advantage of having a consolidated fund is that you will only be paying one set of fees.

Another is that you will have a more significant capital amount to which returns will be applied. A disadvantage of moving multiple funds into a single consolidated fund is that any risk to that fund applies to your whole pension. You should seek professional advice before deciding to consolidate your funds.

planning for a pension

3. Annual Fees

Most pensions have an annual fee attached to them, and the amount you pay varies from fund to fund. What is critical for you to understand is that your pension fund should be growing at a greater rate than the annual fees you pay.

If your fund is routinely making less money than you are paying in fees, you are losing money. You should be wary of the costs you are paying and adjust your pension accordingly.

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However, you should not let high fees put you off, as they can indicate high performance. Regularly checking your pension will help you keep track of how it is performing and what, if anything, you need to do.

4. Pension Fund Size

For a lot of pension funds, size matters. Having a larger amount of money in your pension fund means it will grow faster than a smaller one. A couple of factors to consider when deciding how much money you will put in your pension fund are:

  • Tax Relief. Any contributions you make to your pension benefit from tax relief.
  • Compound Interest. Any interest your fund accumulates gets added to your pension pot, and this accumulated amount then receives interest. This process is known as compound interest, and it has a powerful impact on your pension’s growth.

Taking these two factors into consideration, you should be able to understand the benefits of putting as much money as possible into your pension pot. Maximising your pension will give you the best opportunity for a comfortable retirement.

5. Age

The age you start accumulating your pension pot determines the amount of time you have to build it up. Your age when you retire is also critical. For instance, if you want to retire at fifty, you might need enough money in your pension to last forty or fifty years. However, if you keep working into your seventies, your pension pot may not have to be so large.

For the State Pension, your age is also a factor. Currently, if you defer your pension for at least nine weeks, it will increase by 1%, around 5.8% if you delay for 12 months.

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The extra amount you get by deferring will be paid along with your pension when you start receiving it. Click here to get more information on deferred state pensions.

planning for your pension

6. State of Your Health

Many retirees consider purchasing an annuity when they retire. If you choose this option, you should know that you can get additional income from an enhanced annuity if you qualify. 

Potential qualifying factors include serious illnesses such as diabetes or cancer. Other possible factors are lifestyle choices such as smoking. Enhanced annuities can pay up to 64.7% more than a lower-level standard allowance.

7. Your Postcode

When calculating income from annuities, providers will look at mortality rates in your area. This qualification factor may be unfair, however, it is no different from practices in other insurance fields such as car insurance. If you are considering moving home, you might consider getting quotes for your new location. The reason for this is applying at your new postcode could be beneficial or leave you out of pocket, so better to check first to ensure you get the best deal.

Preparing for retirement…

Achieving the best performance possible from your pension is critical to ensure you have a comfortable retirement. To keep your pension on track, you should conduct regular pension checks, including the fees you’re paying and the growth it is achieving.

Hopefully, these seven little-known pension factors will help you on your way to a comfortable retirement.

If you are beginning to consider your pension, speak to a regulated financial adviser like Portafina or, view the info at the Money Advice Service.

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