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The best steps to take to improve your pensions prospects

“Recent research by consultants Aon Hewitt found that DC members retiring today had pensions that were 18pc smaller than those of people retiring just three years ago, thanks largely to declining annuity rates. The average DC pension pot is worth just £56,000 today. If 25pc is taken as a tax-free lump sum, this leaves only £42,000 with which to buy an annuity.

Three years ago this would have bought an income of £1,400 a year for a 60-year-old man; today it secures just under £1,200 a year.”

To improve your pension prospects possibly the most important thing to do is to regularly check your contribution rate.  The bottom line is the more you put into your pension the more you should get out of it. 

What happens a lot is that people choose the lowest contribution level when the join a pension scheme and then never review it or change it.

“On average, private sector workers put around 9pc of their salary into a DC scheme (this includes their own and their employer’s contribution). This compares with contribution rates of around 20pc in a final salary scheme.

Tom McPhail of Hargreaves Lansdown said: “Everyone should find out how much is being paid into their pension – if it is less than 12pc of your salary, it is not enough.”

A good rule of thumb is to take the age at which you starting contributing to a pension, then halve it; this is the percentage of your salary that should be going into a pension each month.”

To review if you are getting the best out of your pension contributions Enable, IFA’s in Bishop’s Stortford can help.

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