Pension planning essential to ride economic turbulence

With reports suggesting that market turmoil has created a £80.3billion shortfall in final salary pension schemes and defined contribution pensions suffering as well, Skandia’s Strategy Director, Michelle Cracknell offers words of wisdom to people worried about the impact of current stock market turbulence on their pension schemes.

“If I had to offer guidance to anyone planning for their retirement, whatever their age, it would be to seek professional advice. A pension is one of the most important investments you will ever make – it is your lifeline when you retire and will determine the level of choice that you will have for the last 30 to 40 years of your life.

“We all seek advice from a doctor when we are worried about our health or a plumber when our pipes are leaking. Seeking advice about your pension is no different. A financial adviser can help to tailor your pension plans for your specific needs, taking into account your individual requirements, current salary and salary expectations. Age is a particularly important factor to take into consideration. As you near retirement in a defined contribution pension scheme, your adviser may adjust the investments to reflect when you intend to access the funds and hence avoid a sharp fall prior to encashment..

“When making an investment, you need to decide the level of risk that you are prepared to tolerate. It is a well proven fact that the pain of absolute loss is greater than the pleasure of absolute gain. For this reason, it is better to focus on the level of loss that you could possibly sustain and decide whether this is acceptable.

“With current financial instability, it is all too easy to stop contributing into a pension. However, this could be just the time to invest especially when a pension contribution attract valuable tax reliefs. A financial adviser, will help you design a financial plan that meets your plans for retirement and build an appropriate investment portfolio for the timescale and you attitude to risk that will give you not only peace of mind, but the means to achieve your hopes and dreams.”

Skandia is a leading international long term savings group providing pensions, investment and protection products through intermediaries in the UK and overseas.

For more information, visit skandia.com