Is it really worth putting money into a pension?

Many business owners are of the opinion that putting monies aside for pension is pointless given the poor investment returns and the high charges of the pension providers. Prevailing opinion is that it is preferable to invest outside of the pension into buy-to-let investment properties.

Whilst it is true that a lot of business owners have lost confidence in conventional pensions, others are using the poor performance of pension funds as an excuse not to make proper provision for their retirement. The recent rise in value of buy to let properties have added to the jaundiced view of pension investment, as particularly with old style pensions – this is poor by comparison.

It is important to plan ahead to maximise the full potential of any form of long term savings and it would be wise to consider a full review of your pension arrangements. The rules have changed and there are far more opportunities now to invest monies in pensions to better effect. A full review with a specialist would be a wise move but this should be full in the true sense of the word. A complete performance comparison of both funds and pension types, don’t be fooled into swapping your existing pension for another similar pension arrangement with restricted fund choice and high charges.

You do not have to put up with poor performance as it is now possible to switch your funds to new style pensions that enable one to influence the final size of the pool of cash from which one can later draw benefits. It is possible now to switch your pension to a new “wrap” style of investing, this often means that you can now invest with the worlds top fund managers.

A full review should provide a forward view of the income that you need in retirement and the size of the cash fund that is required meet that target. Do not rely upon the projections provided by the pension companies but obtain a “reality check” from a pension specialist.

There are further options for business owners to engage in creative pension planning as part of the overall planning process and as you are not allowed to invest in residential property via a pension then you might consider investing in commercial property directly or in property funds.

There is considerable scope for business owners to use their company pension as a planning tool for the business as well as a source of wealth in retirement.

Ensure also that the adviser is able to provide you with an ongoing regular review service for advice (minimum quarterly) and they should provide you with an action plan and monitor the key measures to improve the value of your pension over the years ahead.

For a full pension review – request a 2 minute pension audit questionnaire.

About Ray L Best

Ray Best has had over 30 years experience of advising on complex financial matters. A published author of a number of books including “Partnership and Shareholder Protection”, Inheritance Tax Simplified”. We provide an initial meeting at no cost and only engage with clients when we can add significant value.

This entry was posted in Personal Financial Advice and tagged , .

Leave a Reply