autumn 2015 myfuture … · autumn 2015 it’s your choice money talk slow and steady wins ... •...

myfutureFIDELITY’S PENSIONS MAGAZINE

AUTUMN 2015

It’s your choiceMoney TalkSlow and steady wins the race

The cost of adviceTHEINSIDER

An easy way to plan for retirement

PlanViewerSPOTLIGHT ON:

MYFUTURE AUTUMN 2015MYFUTURE AUTUMN 20152 3

Issued by FIL Pensions Management. Authorised and regulated by the Financial Conduct Authority. Registered in England and Wales No. 201514. Registered offices at: Oakhill House, 130 Tonbridge Road, Hildenborough, Kent, England TN11 9DZ. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide Investment logo and F symbol are trademarks of FIL Limited 2015. UKM1015/7474/SSO/0416

Everything you need is online:

PlanViewer is the simplest way to take control of your retirement planning and manage your pension account. If you don’t have your login details you can request them on the site: planviewer.co.uk

There is general retirement planning information on our main website: fidelity.co.uk/pensions

If you need to contact us:

Email [email protected]

Call 0800 368 6868 (open Monday to Friday from 8am to 6pm)

To give us feedback or share your thoughts on the magazine:

Email [email protected]

Take control

Welcome to myfutureContentsYou may have noticed a few changes if you’ve logged into your pension account on PlanViewer over the past few months. These changes are in direct response to feedback that you’ve given us.

You told us that switching between funds on PlanViewer was difficult.

So we’ve made the process simpler, and created tutorials that take you through each step.

You told us that you didn’t want to have to remember one PIN for PlanViewer and another for when you call us.

So we’ve combined them into one password, which is easy to change on PlanViewer.

What’s more, we’ve responded to your feedback on the transfer process. From now on if you transfer pensions from old employers into your Fidelity account, we’ll manage the process for you, and keep you informed at each stage. We’ve also cut the time it takes by half.

We’re here to support you every step of the way. Key to that commitment is making sure our services meet your needs and make retirement planning simpler. And, of course, introducing improvements over time to ensure

that remains the case. myfuture is an important part of that commitment.

If you have ideas for how we could do things better or questions we can help with, please get in touch.

I hope you enjoy this edition of myfuture magazine.

Julian Webb Head of DC & Workplace Savings

15 Number Power An extra boost to your savings

16 Money Talk Slow and steady wins the race

18 Ask PennyPenny Lummes suggests how a new member can get on top of their retirement planning

12 Pension Focus What’s new in the world

of pensions?

13 Five minutes with…Charlie Nicol, a retirement adviser with Fidelity’s Retirement Service

14 Money Multimedia Our picks to take your financial planning online

4 Top Five TipsFive financial mistakes to avoid at different ages

5 It’s your choice Your three retirement planning choices

9 Spotlight on: PlanViewerLooking for an easy way to plan for your retirement?

10 Fidelity’s viewSaving a little can go a long way

11 The InsiderThe cost of advice


TOP FIVE TIPS

Five financial mistakes to avoid at different ages

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2 3

5

Tip 1: In your 20sBuilding debt rather than savingsIt’s simple: don’t spend more than you can afford and save for the things you want. Yes, retirement seems far away. But if you start saving early for it, compound interest will have longer to work its magic. So, saving £100 a month for 25 years at 5% interest will net you almost £60,000. Save the same amount for just 10 years, and you end up with £15,600.

Tip 2: In your 30sCombining financesPeople often make the decision to combine their income, investments and accounts with their spouse or partner. Keep at least some of your finances separate. Deposit your income into your own bank account. Share expenses from a joint account into which you both contribute. Keep any investments you bring into a relationship in your own name. If a relationship ends, you should end up more financially secure this way.

Tip 3: In your 40sForgetting your retirement In our 40s we’re often busy spending money on the things we want at the expense of savings, in particular our retirement savings. Taking care of children’s needs can also be a priority. But the more you save and the sooner you save it can make all the difference – see the example in tip 1 for the proof. And by guaranteeing your future, your children won’t have to worry about you once they start building their lives.

Tip 5: In your 60sForgetting your income Many people focus on building their retirement savings until they decide to start taking their benefits. Then they stop saving and start spending. Our aim must be to continue growing our retirement savings. This way our money will go further. This is especially important now that we don’t have to buy an annuity with at least some of our savings.

Tip 4: In your 50sGetting too conservative

Once upon a time when people turned about 55, most worried

about protecting what they’d saved so far. We’re now, on average,

living well into our 80s and 90s, which means we need much more

in retirement. So being too conservative with our investments is no

longer the best financial strategy. Instead, we need to make sure

our money is working hard so it can continue to grow well into our

50s and beyond.

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Important information: The value of investments can go down as well as up and you may get back less than you invested. Fidelity does not give advice. Eligibility to invest into a pension depends on personal circumstances and all tax rules may change in the future. You will not be able to withdraw money from a pension until you reach age 55.

Why are these choices so important?

Almost 65% of retirees who hadn’t planned properly for a comfortable

retirement didn’t realise this until they had retired.

HSBC: The future of retirement (2015)

When Daniel Black decided to buy a new car, he compared all the options in his price range and chose the one with the features he liked best.

When his neighbour, Jacqui Dickens, decided to re-paint her kitchen, she ordered many samples, painted swatches on several walls and chose her favourite colour.

When her daughter Olivia left school, she did work experience in various jobs, and eventually decided she wanted to study to be a nurse.

Daniel, Jacqui and Olivia weighed up the alternatives and made their choices. They may have asked other people’s advice but they made their own choice in the end. In fact, why would they let anyone else choose their new car, the colour of their kitchen or their profession?

Well, when we see decisions as hard we’re not always great at making them.

Financial decisions are the perfect example of decisions we’d often rather avoid. So, if someone makes them for us, we’re happy.

But if you stop and think about it, should you be happy that someone else makes important decisions that affect you? If you wouldn’t let someone else choose the car you drive, why let them decide what you do for your retirement?

With that in mind we’ve broken down the three choices you have for your retirement planning. Deciding what to do isn’t difficult, particularly as there are tools you can rely on to guide you.

Your three retirement planning choices are:

Choice 1: How much to contribute to your pension account

Choice 2: Where to invest your contributions

Choice 3: When to take your benefits

Follow this guide, and you’ll know what to do to make the right choices for your retirement.

It’s your choiceYour three retirement

planning choices

Daniel Olivia

Jacqui


Choice 2: Your toolkit

PlanViewer, our online account management service, offers a simple way to see where you’re invested, and tools to help you make your investment decision. Log into your account at planviewer.co.uk. If you don’t have your login details to get into your account, click on the ‘Forgotten your login details’ link on the homepage.

Step 1: Find out where your account is investedLog into your pension account on PlanViewer to see which funds you’re invested in and find out more about them. You can also:

• download factsheets on all the funds your scheme offers (‘My plan’ tab, ‘Available fund prices’)

• look at the past performance of funds (‘My plan’ tab, ‘Available fund performance’).

Step 2: Understand investment basicsThere is a simple but detailed guide to investing on PlanViewer (‘My toolkit’ tab, ‘My guide to investing’). It will help you with the basics of investing, developing your investment strategy and choosing between different funds.

Step 3: Are you happy with the funds your account is invested in?If you’re happy where you are, you don’t need to do anything. If you’d prefer to make a different choice, you can change your funds on PlanViewer. Look for the ‘Change investments’ link under the ‘My plan’ tab. You can also contact us and we’ll make the changes for you.

Step 4: Review your decision It’s important to review your fund options over time to make sure they still offer what you’re looking for. You can track how your funds are doing at any time by logging into your pension account on PlanViewer.

You may not be retiring for many years, so don’t judge performance over short periods of time. But, if you keep on top of your fund choices and how they’re doing over the years, you’ll find it easier to decide if a fund is meeting your needs or not.

Choice 2: Where to investYour scheme offers you a choice of funds that you can invest your pension account in. When you join, an investment choice will typically be made for you – your account will be invested in the scheme’s default investment choice (the lifestyle or working life strategy).

The default investment choice is a ‘one-size-fits-all’ solution, as your scheme tries to suit the needs of all members. You may be happy with that. But it’s important that you understand how the default works, and which funds you’re investing in, so you can be sure it’s the right decision for you.

Instead of the default, you can choose your own fund(s) from the range your scheme offers (self-select).

You don’t have to be an investment expert to choose where to invest your pension account. What’s important is to know the funds your account is invested in and what those funds aim to achieve – regardless of whether you choose lifestyle or self-select.

Lifestyle…

The investment decisions are made for you.

Your savings are switched automatically into different funds over time, based on the principle that your investment style can change during your working life.

The fund(s) that your pension account is invested in will be a combination of growth (such as equity), bond and cash funds. The combination at different ages depends on how your scheme’s lifestyle works. The booklet will explain this (if you no longer have your copy, download it on PlanViewer – log into planviewer.co.uk and look for the ‘My plan’ tab, ‘Plan forms & documents’).

…vs self-selectYou make the investment decisions.

You choose the combination of fund(s) you’d like to invest in from your scheme’s fund range.

You’re in control of your investments, and can make changes when your needs change – no one will make changes on your behalf.

You don’t need to be an investment expert, but you should think about what you’d like your savings to achieve, and which funds are best suited to meet your needs.

How often should I review?

Aim to review all your choices at regular and specific times,

for example, the start of a new year or your birthday.


Step 1: Find out what you’re contributing nowLook at the information you’ve received from your scheme or contact Fidelity.

With the Money Advice Service’s Workplace pension contribution calculator you can put in the percentages you and your employer are contributing, and see what this translates to in pounds. You can also see the total amount, including tax relief, which is going into your account each month and each year. By changing the percentage you contribute, you can quickly see the effect on your annual savings. Find the calculator at moneyadviceservice.org.uk in the ‘Tools & calculators’ section.

Step 2: Think about the retirement you’d likeFidelity’s Retirement Calculator works out how much money you may need to live on in retirement based on the things you’d like to do. Want four weeks in the sun each year, several meals with friends a month, regular concert tickets? You can include all of these and more, and the calculator works out the annual cost of the lifestyle you’d like. Find the tool on PlanViewer – log into planviewer.co.uk and look for the ‘My toolkit’ tab, ‘Am I saving enough?’.

Step 3: Work out how much you’re on track to have saved by retirementFidelity’s myPlan tool gives a simple indication, based on your current contributions, of the total amount you’re projected to have saved by the time you want to start taking your benefits. There are six questions to answer, including your age, your salary, how much you’ve saved for retirement so far. You can estimate the answers if you need to. Then click on the plus or minus buttons to increase or decrease different variables – such as how much you contribute – to quickly see how choosing different options can change your savings over time. Find the tool on PlanViewer – log into planviewer.co.uk and look for the ‘My toolkit’ tab, ‘Am I saving enough?’.

Step 4: Decide how much you should be saving nowThere is no right answer – it depends on how much money you’d like to have by the time you start taking your benefits (based on steps 2 and 3), and of course how much you can afford to save.

The Money Advice Service’s Quick cash finder tool helps show where you could save a little extra by cutting back on your regular spending. Find the tool at moneyadviceservice.org.uk in the ‘Tools & calculators’ section.

What’s important to remember is that saving a little is better than saving nothing, and small extra amounts can make a big difference (see ‘What difference does thinking about how much I contribute make?’ above).

Step 5: Review your decision Could you afford to contribute a little more? Have you had a pay rise? Could some of that go into your pension account? Re-look at the tools over time to see how your retirement picture has changed.

Choice 1: How much to contributeThis is probably the most important choice you’ll make.

Your scheme will often have a minimum percentage that you have to contribute (this usually starts at 1% of your salary but could be higher).

Your employer will also contribute to your pension to help you save. In some schemes, the more you contribute the more your employer will contribute, up to a certain amount.

You also get tax relief1 on your contributions. In most schemes, this means you get 20% tax back from the government as an extra contribution into your pension account. The way tax relief is given depends on the type of pension arrangement you’re a member of.

Just because your scheme sets your contribution to the minimum amount doesn’t mean this amount is going to give you enough to retire on. You need to do the maths to get an idea of how much you want to have saved for retirement, what you need to put in to get it, and of course, what you can afford.

What difference does thinking about how much I

contribute make?A big difference2.

Mike contributes 3% of his £40,000 a year salary to his account – that’s £100 a month. In 30 years,

his account should be worth around £83,200.

If Mike increases his contribution to 4%, or £133, his account should be worth around £110,600

in 30 years.

So contributing an extra £33 a month can turn into an extra £27,400.



Step 1: Look at how starting to take benefits at different ages could affect your savingsFidelity’s myPlan tool can give you an idea of how retiring earlier or later could affect the savings you build up. Find the tool on PlanViewer under the ‘My toolkit’ tab, ‘Am I saving enough?’.

If you’re 55 or older, you may find Pension Wise helpful as you think about when to start taking your benefits. It’s a free and impartial service provided by the government. Visit gov.uk/pensionwise

Step 2: Let Fidelity know the age you plan to start taking your benefitsThis is especially important if you’re invested in the lifestyle or working life strategy, as the automatic changes to your investments will be based on this age.

In most schemes you can do this on PlanViewer. Log into your account at planviewer.co.uk and look for ‘Change your details’ under the ‘My profile’ tab. You can also contact us to confirm it.

Step 3: Review your decisionAs your plans change, when you want to start taking your benefits may change too. Don’t forget to let Fidelity know.

Choice 3: When to take your benefitsThink about when you’d like to start taking your benefits, as your plans depend on how many years you have to save.

The earliest you can normally start to take savings from your pension account is 55. Obviously, the earlier you start, the less you may have to live on later. Also, the longer you save, the more you should end up with.

Important information:The value of investments can go down as well as up and you may get back less than you invested. Fidelity does not give advice. Eligibility to invest into a pension depends on personal circumstances and all tax rules may change in the future. You will not be able to withdraw money from a pension until you reach age 55.

1 Tax relief depends on individual circumstances and any changes in the law. The manner in which tax relief is given depends on the type of pension arrangement you are contributing to. HMRC restricts tax relief on contributions to 100% of earnings or £3,600 a year, whichever is higher.

2 Source: Fidelity. The figures given are in today’s prices, are only examples and are not guaranteed. They are not minimum or maximum amounts. The returns are based on a hypothetical 5% gross annual return, which includes re-investment of all returns. There are no initial charges on funds and the total expense ratio is 1% a year. The final values do not take account of taxes or the effect of inflation. Assumes basic-rate tax relief.

On average, when do people retire?

On average, when do people retire?

The average retirement age for women is 63.1. For men, it’s 64.7.

Department for Work and Pensions (2014)

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2

3

4 5

Looking for an easy way to plan for your retirement? Then log into your pension account on PlanViewer.

SPOTLIGHT ON: PlanViewer

HOW TO LOG IN

Log into your pension account at planviewer.co.uk

Your login details were sent to you when you joined your pension scheme. If you’ve forgotten these details, please follow the ‘Forgotten your login details’ link on the site.

1. Look at a snapshot of your pension accountFirst stop after logging in is the homepage, which gives a brief update of:

1 The latest value of your account2 How the value of your account has changed in the last year3 Where your account is invested.

Want more details?Click on the ‘My plan’ tab. You can take a look at all the investment fund choices you have, the performance of those funds, and your transaction history. It’s also the place to change your fund choice, if you’d like to, and download forms and documents for your scheme.

2. Think about your choicesFor help with your choices, and to use our planning tools, click on the ‘My toolkit’ tab.

4 My guide to investing Follow this link for a step-by-step guide through investment basics, and how to choose between your fund options.

5 Am I saving enough? There are three steps to follow to make sure you’re saving enough for when you plan to start taking your benefits. Our planning tools can help you figure out where you are, where you want to be, and what you need to do to get there.

Read It’s your choice to find out more about your choices.

3. Update your details The ‘My profile’ tab is the place to manage your contact information – change your address, email and telephone numbers*. You can change your PlanViewer login details here too. This is also the place to confirm when you plan to start taking your benefits (particularly important if you’re invested in the lifestyle or working life strategy). Find this option under ‘Change your details’.

If you’re considering taking your benefits from your pension account, or are interested in what happens next… the ‘My retirement’ tab has everything you need.

* Not all schemes allow you to do this online.

Three things you can do on PlanViewer:


THEThe cost of advice

The recent changes to retirement rules mean that, more than ever, people need expert help in making the right choices at retirement. But many are unwilling to pay for professional advice. Richard Parkin, Head of Retirement at Fidelity, explains why that could turn out to be a false economy.

Those looking for expert help when they’re ready to start taking their benefits will generally be offered guidance or advice. For most people these two words mean the same thing. When talking about financial matters though, they have very different meanings:

• Guidance means you do your own research and may discuss your options in general terms with a specialist. You remain responsible for making your own decisions.

• Advice means the specialist will suggest a specific course of action based on your circumstances. This will usually include a personal recommendation of one or more products.

Historically, many advisers earned their fees through commissions paid to them by product providers.

Recent regulatory changes mean that financial advisers now have to charge explicit fees for their advice. This has put many people off taking advice, but it’s worth considering the following:

• What is the cost of not taking advice? Getting retirement decisions wrong could cost you far more

than the advice fee in extra taxes, lost benefits or lower income. Few of us would try and do our own conveyancing on a house purchase or handle legal disputes ourselves, so why would we try doing our own retirement planning?

• What will you pay anyway? Guidance is generally presented as a free service but you

may find that you’re still paying commission, particularly if you buy a guaranteed income product. In this case it may be worth paying a bit more and getting personalised advice.

• Is it really unaffordable? People will understandably be put off by fees but remember

that retirement may last a very long time, often 25 years or more. Consider what any upfront fee amounts to over that time. A £2,500 fee equates to less than £2 a week over 25 years. Might that be worth paying for peace of mind?

• Do you have to take advice? There may be some occasions where you have to take

financial advice. The government recently introduced a requirement for people looking to transfer pensions that carry guarantees to take advice. This includes defined benefit or final salary pensions and some older insurance contracts. Often, the value that is available for transfer from these schemes is less than the benefits are worth, so taking advice can be particularly valuable.

• Who pays? You do, but the fee can often be taken from your retirement

savings rather than you paying for it directly. There are employers or schemes that meet some or all of the cost of advice, so it’s worth checking whether you have this valuable benefit.

• Are you getting a good deal? Different advisers will charge different fees and, as with any

significant purchase, you should shop around to find the best deal. That won’t always be the cheapest price but one that gets you what you need.

Retirement decisions are often irreversible, making it important that you get them right. We suggest that people think about all their retirement needs and sources of income before making any decisions. Creating a retirement plan will ensure you’re making the most of your savings. You can do this yourself, but many will seek professional advice to make sure they don’t make mistakes. You may find it’ll be the best money you’ve ever spent.

Saving a little can go a long way

Fidelity’s view

“ I find it hard to save. The cost of living keeps going up.”

“ I have too many financial commitments. I don’t have anything left at the end of the month.”

Important information: Source: Fidelity. The value of investments can go down as well as up and you may not get back the amount originally invested. Eligibility to invest into an ISA depends on personal circumstances and all tax rules may change in the future. The figures given are in today’s prices, are only examples and are not guaranteed. They are not minimum or maximum amounts. The returns in the example are based on a hypothetical 5% gross annual return, which includes re-investment of all returns. There are no initial charges on funds and the total expense ratio is 1% a year. The final values do not take account of taxes or the effect of inflation.

A little truly can go a long way.

While it’s easy to make excuses not to save, the good news is it can be easier than you think to find ways to save. A simple change to your daily routine can have a big impact on your savings.

Need convincing?

Giving up your daily coffee would save you…

If you invest the £50 you save every month in a stocks and shares ISA, your money would grow even further…

So, for the cost of one cup of coffee a day you could save a significant amount over time.

Of course, there are other ways to cut back to boost your savings even further, or save more sooner…

Look at how your savings would build up...

5 years 10 years 15 years

£9,000£6,000

£3,000


£9,000£6,000

£3,000


£12, 204.45

£7,323.80

£3,306.57


£12, 204.45

£7,323.80

£3,306.57£2.50 a day

£50 a month

£2.50 a day

£50 a month

Bring your lunch to work

Cancel the gym membership

you don’t use enough

Give up smoking

Bring your lunch to work

Cancel the gym membership

you don’t use enough

Give up smoking


Read The Insider for an insight into why financial advice can be a good investment.

FIVE MINUTES WITH…

When Paul Noakes decided to leave the rat race and start taking his retirement savings, he wanted to get the most out of the savings he’d accumulated during 23 years in the Army pension scheme, and as a member of five company schemes. Should he buy an annuity with some of his savings and get an income that way? Should he leave some savings invested and take an income from them? What would be the best use for any cash he took?

Paul knew he needed help. So he made contact with Fidelity’s Retirement Service. This service ensures you have everything you need to help you decide how to take your benefits:

• To compare the options, there are planning tools and detailed information on PlanViewer.

• If you have questions, our retirement specialists can answer them, explain the options and their implications, manage the process for you, and help with the paperwork.

• If you’d like advice, for a fee the team can recommend the option(s) you should choose based on your needs.

We asked retirement adviser Charlie Nicol about the Retirement Service.

What are the questions customer’s usually ask when they first contact the Retirement Service?

Initially what’s most important is to gauge exactly what they need from us. We try to understand the level of service they’re looking for and take it from there.

Should customers have done all their homework before they contact you?

No, we’re here to help them with that. Obviously some people want more help than others. Some have done all their homework, know exactly what they want to do and are happy making their own decision. Others know they need help and feel that our advice service would be of value to them.

Does the advice service answer the question ‘What should I do?’ for the customer?

Yes, it does. We establish each customer’s objectives, and then determine the best approach for them. We’ll look at all their pension savings and recommend the best way to turn those savings into an income.

How long does the process normally take?

There’s no set time. But generally it takes between four weeks and a few months to organise everything.

Fidelity’s Retirement Service “made life very simple” for Paul Noakes. Why not see what it could do for you?

Charlie Nicol, a retirement adviser with Fidelity’s Retirement Service

Important information:Please remember, you will not normally be able to withdraw money from a pension until you reach age 55. To help you decide how to take your benefits:• Fidelity’s Retirement Service has a team of specialists who offer free guidance or fee-based advice.

Call 0800 368 6873 (Monday to Friday, 9am to 5pm).• The government offers Pension Wise, a free and impartial guidance service. Visit gov.uk/pensionwise

Paul Noakes,recently retired

What’s new in the world of pensions?Pensions can be technical but they’re never boring. They’re always changing, and there’s always something new to report on.

This year is no different. In his July budget speech, the Chancellor announced these changes:

Lower annual allowance for top earners There will be a tapered reduction in the annual allowance from £40,000 to £10,000 for people whose income (including the value of their retirement contributions) is over £150,000 a year. In practice, this change may affect anyone with an income of more than £110,000.

What is the annual allowance?The maximum you and/or your employer can contribute to all your pension accounts in one year, without having to pay a tax charge.

Alignment of pension input periods (PIPs) To make the reduction in the annual allowance, the government will align PIPs with the tax year. Each year, all PIPs will run from 6 April to 5 April of the next year.

To start the alignment process, any PIP that was open on 8 July 2015 (the date of the announcement) was closed on that date. That PIP will run from 9 July 2015 to 5 April 2016.

What is a PIP?A period of time used to measure the contributions that a member and/or their employer have paid against the annual allowance. It helps assess if a member has exceeded the annual allowance, and potentially owes the tax man some money.

Lower lifetime allowanceThe lifetime allowance will be reduced from £1.25 million to £1 million.

What is the lifetime allowance?The maximum amount of retirement savings you can build up through your working life and still enjoy tax advantages.

These changes will come into effect from

6 April 2016. If you think they may affect you, it would be a good idea to speak

to a financial adviser.


Our picks to take your financial planning online

MONEY MULTIMEDIAMULTIMEDIA

For the tech-focused:Download the MoneyHub app to organise all your finances and plan for the future in one place. Set a budget and track your progress. Try the debt planner. Analyse your spending habits and set savings goals. With an in-app purchase, you can also securely view all your bank accounts, credit cards and investments. You can even add in your retirement savings and mortgage. Visit the app store on your device.

For when you’re on the move:From BBC Radio, the 5 live Consumer Team with Martin Lewis podcast is a must. Lewis has been voted the most influential personal finance tweeter2. You’ll enjoy, as the BBC describes it, “lively debate and tips on how to make the most of your money”. Visit bbc.co.uk and search for ‘Martin Lewis’.

For some fun:Save money, live well with the Penny Golightly blog. A financial blog of the year finalist3, Penny lives creatively within her means. She loves finding the nicer things in life for less. And of course sharing her tips and recommendations, and the offers and freebies she finds. Visit pennygolightly.com

For the ladies:The SavvyWoman website aims to help women get more from their money. The site recognises that men and women make different choices about money. But there are plenty of expert opinions, tools and tips to help everyone make the most of their cash. Visit savvywoman.co.uk

For getting serious:The Telegraph’s Personal Finance website wants to make growing and protecting your money easier, and to help you spend less. It covers investing, mortgages, pensions and everything in between. It’s so good it was voted financial website of the year1. Visit telegraph.co.uk and look for the personal finance section.Sources:

1, 3 Headline Money Awards 2015 2 PeerIndex 2014

An extra boost to your savingsAkash is thinking about saving a bit more money into his pension account each month. He can’t decide if it’s a good idea or not.

An interesting feature of pensions, which Akash is not aware of, is the tax advantages – called tax relief.

Tax relief is a way of encouraging people to save through a pension.

You make a contribution and the government tops it up. It works in different ways for different types of pension schemes. But for many of us, Akash included, it means we get an extra saving on top of the amount we save each month.

Akash is a basic-rate tax payer, so if he decides to contribute £80 to his pension account, £100 will be added to it. The government makes up the £20 difference. Higher-rate taxpayers may get additional tax relief.

Take a look at what saving more in his pension account could mean for Akash:

If Akash decides to save an extra £300, the government will add tax relief = £75

So each month, the total amount that goes into his pension account = £375

Over time the boost to his savings that tax relief offers can add up:

In 20 years Akash would’ve saved around £109,700.

But with tax relief, his pension account could be worth around £137,000.

Tax relief has boosted his pension account by £27,300.

Tax relief in the newsThe Chancellor recently announced plans to review how pensions work. One idea is to do away with tax relief. At retirement we could then take out our savings tax free.

A consultation is looking into all the options. The government has asked the pensions industry to contribute to the debate, so we’re currently putting our views together. Please watch this space.

Important information: Source: Fidelity. The figures given are in today’s prices and are only examples and not guaranteed. They are not minimum or maximum amounts. The returns in the examples are based on a hypothetical 5% gross annual return, which includes re-investment of all returns. There are no initial charges on funds and the total expense ratio is 1% a year. The final values do not take account of taxes or the effect of inflation. This example assumes basic-rate tax relief. Tax relief depends on individual circumstances and any changes in the law. The manner in which tax relief is given depends on the type of pension arrangement you are contributing to. HMRC restricts tax relief on contributions to 100% of earnings (subject to your annual allowance) or £3,600 a year, whichever is higher. The value of investments can go down as well as up and you may get back less than you invested. Fidelity does not give advice. Eligibility to invest into a pension depends on personal circumstances and all tax rules may change. You will not normally be able to withdraw money from a pension until you reach age 55.


The result of our storySteady Steffi – our tortoise – ‘beat’ Erratic Eric. Her savings grew by over £51,500 more than Eric’s. The reason? She invested regularly and consistently, and her savings spent the most time invested in the stock market. This means her savings were able to take advantage of the growth potential that the stock market offers over the long term.

Erratic Eric invested regularly and consistently, but his money spent a lot of time in a savings account earning interest. His money was not all invested in the stock market all of the time, so he lost out on the stock market’s growth potential.

The moral of our storyBeing steady and consistent, and following the three lessons is the right approach to investing.

How much has Steady Steffi’s investment grown to in 30 years?

£249,630

How much has Erratic Eric’s investment grown to in 30 years?

£198,100

Important information:Source: Fidelity. Based on total returns since 1986 from the FTSE All-Share Index, including dividends. The value of investments can go down as well as up and you may get back less than you invested. Past performance is not necessarily a guide to future performance. Fidelity does not give advice.

Hello! I’m Steady

Steffi.

Hello! I’m Erratic

Eric.

Many people are put off by investing. They think it’s complicated. They think they have to understand stock markets inside out. But luckily, with hindsight, an investment approach that works is clear.

Money TalkSlow and steady wins the race

History offers three lessons on investing money that we can all put into practice:

It boils down to this: when it comes to investing your money, slow and steady is a good idea. It may sound like a boring strategy. But, like the tortoise in the fable that outruns the hare, you’ll win in the end.

To prove it, let’s give some personality to the figures we have.

Steady Steffi and Erratic Eric both started saving regularly 30 years ago. On 1 January 1986, they started with £1,000. At the beginning of each new decade since then, they increased the amount they saved by £1,000 (to protect their money from inflation).

But their approach to saving was different:

Steady Steffi invested her savings without fail in the stock market on 1 January every year for 30 years.

By 2015, Steady Steffi has invested £78,000 in the stock market.

Erratic Eric put his savings into a bank account on 1 January for the last 30 years. He only invested his savings in the stock market when he thought it had fallen to the lowest point (i.e. share prices were about to start rising again).

By 2015, Erratic Eric has also set aside £78,000, but not all his savings were invested in the stock market over the last 30 years.

1.BEGIN EARLY

2.Save as

much as you

can afford

3.Invest regularly and keep your

money invested


Penny says:I’m so pleased that you’re thinking about taking stock of your retirement savings, Alison. It’s something we all need to do once in a while. Starting a new job is the perfect time to do it.

I suggest you do three things.

Alison Sharp

Penny Lummes

Alison Sharp asks:I’ve just started a new job and joined my company’s pension scheme. I’ve been a member of a few other schemes in other jobs I’ve had, but haven’t paid much attention to them. As a new member, what do you suggest I do to get on top of my pension now?

Penny Lummes suggests how a new member can get on top of their retirement planningPenny Lummes manages Fidelity’s Pensions Service Centre. Her team’s focus is supporting members. If you call, email or write to us with questions or problems, one of them will help you.

PennyAsk The best place to start is to log into your pension account on PlanViewer. It’s such a useful tool for keeping track of your savings. Once you’ve received your PlanViewer login details in the post, log into planviewer.co.uk and change them to something easier to remember. In future, you can log into your account anytime for an update on your savings, to keep track of how your investments are doing and much more. Read Spotlight on: PlanViewer to see everything PlanViewer offers to help you plan for retirement.

The next step is to look through the scheme booklet and other documents you’ve received. They’re detailed, so the easiest place to start is the information in the booklet on contributions and investments. Remember it’s your choice: make sure you’re happy with the amount you’re contributing and where your account is invested.

Our planning tools on PlanViewer can help with these choices. An example is the myPlan tool. It offers a simple way to figure out how much to save to get on track for your retirement. The tool lets you change different variables, such as the amount you contribute or when you retire, to see the effect on your savings. Over time, our tools can also help you review your choices. The article It’s your choice is a good read for more on your choices, and the planning tools that can help you.

Don’t forget to fill in and return any forms you’ve received, particularly the expression of wish form. It tells your scheme’s administrator or trustees who you’d like your retirement savings to go to if you died. Without one, the process can be complicated and time consuming for loved ones.

Finally, think about combining retirement savings from old employers in one place. This should make it easier to stay on top of your retirement planning. Combining savings can be complicated, and isn’t always a good idea, so Fidelity can help you1. If you don’t have the details of all your old schemes, visit the gov.uk website and search for ‘find a lost pension’.

Good luck with taking control of your retirement planning, Alison. We’re here to help if you need us.

To ask Penny a question, email her at [email protected]. We may profile your question in future editions if it could help other members too.

Important information:1 It’s important to understand that transfers are a complex area and may not be suitable for everyone. Before going ahead with a pension transfer we strongly recommend that you undertake a full comparison of the charges, features and services offered. To find out what else you should consider before transferring, please contact us for a copy of the transfer factsheet or download it at fidelity.co.uk/transferfactsheet. You may wish to take financial advice.

Call our experts on 0800 368 6873

Fidelity’s Retirement Service

Issued by FIL Investments International, authorised and regulated by the Financial Conduct Authority. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide Investment logo and F symbol are trademarks of FIL Limited. UKM0815/7073/CSO7482/1115

Every retirement isdifferent.So let Fidelity helpyou plan yours.

Recent pension changes mean more choices for you.

Should you consider taking cash, buying an annuity or opt

for drawdown? What do some of these things even mean?

More than ever, achieving the retirement you want depends

on making the right choices – from the start. Which is where

Fidelity’s retirement experts can help you.

Fidelity has 46 years’ experience in helping over a million

people save for their future. We can work with you to see

if you’re on track for the retirement you want, and help turn

your pension savings into an income.

Why not make a start today? Call 0800 368 6873 foran impartial, no-obligation chat.

The value of investments and the income from them can go

down as well as up, and you may not get back the amount

you invested. Eligibility to invest in a pension depends on

personal circumstances and all tax rules may change. You

cannot access your pension until age 55. It’s worth remembering

you can also take advantage of the government’s free and

impartial Pension Wise service that helps you understand

your pension options: pensionwise.gov.uk

Job No: 50827-10 Publication: Moneywise Size: 297x210 Ins Date: 07.10.15 Proof no: 1 Tel: 020 7291 4700

autumn 2015 myfuture … · autumn 2015 it’s your choice money talk slow and steady wins ... •...

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