Mid-Life MOT webcast

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Hello and welcome to this webcast recording provided by Aviva who provides your pension. You may pause or rewind this recording at any time.

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Before we go any further there is some important information that we need to share with you.

The following presentation should not be regarded as giving any form of financial or investment advice. You shouldn't make decisions on the basis of this presentation alone. If you require advice, you should contact a financial adviser. You can find one using the website shown on the screen.

This presentation is based on Aviva’s interpretation of present laws and HM Revenue & Customs practice for the current tax year. The tax benefits may change at any time and their value depends on your personal circumstances.

The value of an investment can fall as well as rise and it is not guaranteed. You may get back less than the amount that’s been invested.

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As people are living longer it is more important than ever to save for retirement.

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So, what are we going to be covering today and how can we help you? Please pause and take a moment to read the screen before moving on.

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Importance of savings.

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Most people understand the importance of saving. When we think about our savings goals it’s good to think about the period of time we need to save for and then identify the most suitable product or savings account to help us achieve our goals.

It is best to break our savings goals into three categories, short, medium and long term.

So have a think about your short, medium and long-term savings goals. Are you saving in the most suitable accounts to achieve your goals?

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When money is paid into your pension it is invested with the aim of long-term growth. Starting early can be a good idea for a number of reasons but is partly thanks to compound growth, the result of reinvesting any growth received. This could have a significant impact on the value of your pot in the long term. This example shows how an initial investment of £10,000 could grow to £16,289 after 10 years, based on a return of 5% each year. This rate of return is purely for illustrative purposes. However, remember investment returns are not guaranteed, you could get back less than you have paid in. 

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You may not have as many monthly pay days left as you think, so it’s important to start saving as early as possible, and as much as possible. If you pick your age or the nearest to it, the number below it will give you an idea of the pays days you have left, assuming you are planning to retire at 65.

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The Pensions and Lifetime Savings Association (PLSA) have launched retirement living standards using independent research from Loughborough University. They help people to understand how much money they will need to live the lifestyle they want in retirement. The Standards provide a benchmark level of annual income to different standards of living, based around the cost of a range of common goods and services and takes into account different circumstances.

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A ‘minimum’ lifestyle covers all your needs, a ‘moderate’ lifestyle provides more financial security and flexibility and a ‘comfortable’ lifestyle will allow people to be more spontaneous with their money. Exploring categories could help picture what life in retirement could look like for each of the standards.

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Workplace Pensions

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A great way to save could be through your company pension scheme. This is because it's tax-efficient; your employer pays in, too; They’re your pension savings - so if you leave your employer, you can take them with you, And It’s flexible, meaning you can decide how much you would like to contribute, where the contributions are invested, and at what age you would like to take the benefits. You can access your savings from the 'minimum pension age' set by the government. This is currently 55 but is rising to 57 from 6 April 2028. You may be able to access it earlier such as when you have a protected pension age or can't work due to ill health or incapacity.

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Please pause here to read the information on the example contributions table before moving on. 

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Aviva has also developed three ‘rules of thumb’ for retirement saving to help people be better financially prepared:

The first: The 10 Times Rule: Aim to have saved at least 10 times your annual salary by the time you reach retirement age

The second: The 12.5% Rule: aim to save at least 12.5% of your monthly salary towards your retirement. This includes contributions from employee, employer and the government and the Third: The 40 Year Rule: aim to begin saving at least 40 years before your target retirement date

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Your pension scheme offers a range of investments, and you can choose where your money goes. Let's look at how investments work, and what investments are available in your scheme.

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All types of investments work on a risk and reward basis. Generally speaking , the riskier an investment is, the greater its potential for providing higher returns. The downside is that the value is likely to go up and down more, so there is a greater chance of losing money especially over the short term.

With lower risk investments there’s less chance of you losing money, but the returns they’re capable of achieving generally tend to be lower and could possibly struggle to keep up with inflation. Towards the bottom of the risk and reward scale you would typically have Money Market investments, also known as Cash. They are not to be confused with deposit accounts with bank or building societies. Although less risky than other types of investments, there could be circumstances when these investments fall in value, for example if an organisation fails. The value of Money Market investments could also be eroded over time due to the effects of fund charges, product charges and inflation.

At the other end of the scale, you have Company Shares, also known as Equities. While there is more opportunity for potential gains with shares than with other investment types, there is also greater risk that they will fall in value. Generally, each fund offered by Aviva invests in one or more of the investment types shown. There is more information about these investment types in your Investment booklet.

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Here we see which funds are used in an example default investment programme, and how the proportion of each fund in the pension changes in the run up to your retirement. Please pause here and take a moment to read the information on the default investment programme on the screen before moving on.

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There are various types of pensions including workplace pensions, individual pensions and the state pension. Over a working lifetime it is possible to build up money and benefits in different kinds of pensions but with many of us working for multiple employers during a working life, people can sometimes lose track of previous pensions. Please pause for a moment to read the information on the screen before moving on.

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If you have several pension plans, transferring some or all of them into one pot could make financial sense. Each potential transfer needs to be considered on its own merits. …. And there are pros and cons to consider. The potential benefits of transferring to your new scheme are:

- All your pension funds would be consolidated in one place

- The charges could be lower than in your existing scheme

- Access to new pension freedoms from the minimum pension age

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There are a number of factors to consider: there may be penalties if you transfer; you may be giving up valuable guarantees; and you could miss out on potential market growth while the transfer is taking place. There may be differences in fund charges and fund selection. There is no guarantee you will be better off if you transfer.  If you are unsure if a pension transfer is right for you, you should consider seeking financial advice.

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You can complete an expression of wish or nomination form to let us know who you would like your pension fund to go to if you die before taking your retirement benefits. This is normally free of inheritance tax and can be taken as a lump sum or used to provide an income. You can regularly update your beneficiaries through your online account or in writing at any time. You can nominate a number of different beneficiaries. 

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Retirement Planning

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The key factor in experiencing a satisfying retirement is planning, The first step is to think about your personal retirement goals. At what age do you think you will want to stop working? 60, 65, 70? Perhaps you'll want to retire at the same time as your spouse or partner. And it's important to think about the level of income you're likely to need in retirement. Consider how you would like to spend your time; which could include travelling, sports and hobbies.

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The new full state pension for the current tax year is shown on the screen. If you're entitled to a state pension, when will you get it? The current State Pension age has increased to 66 and the government is planning to increase this further in the future.

You’ll usually need to have 10 qualifying years on your National Insurance record to get any new State Pension. You’ll need 35 qualifying years to get the full amount. You may get less if you were contracted out before 6 April 2016. Pension credit gives you extra money to help with your living costs if you are over sate pension age and on a low income. Would you or someone you know qualify for pension credit? If you would like more information about your state pension age, would like to get a forecast of what you might get, or details about 'contracting out', or pension credit you can go to the Government website www.gov.uk.

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Please pause for  a moment to read the information on the screen about how your pension income is taxed before moving on.

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Please pause for  a moment to read the information on the screen about how your pension income is taxed before moving on.

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As long as you’re reached the minimum pension age, there are now several ways in which you can access your pension savings.

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You are able to take all or some of your fund as cash. The first 25% of any cash withdrawal would be tax free, the rest would be taxed as income, like salary. Alternatively, you can take up to 25% of your fund as a tax free payment and then either re-invest the rest into funds designed to provide you with a taxable income, known as flexi-access drawdown or purchase a lifetime annuity with the remainder, which can provide you with a regular taxable income for the rest of your life. You can also choose a combination of these options.

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Please pause for a moment to read the information on the screen before moving on.

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Please pause for a moment to read the information on the screen before moving on.

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As you get closer to retirement it is important to review your benefits and there are several things that can help you: Pension Wise from MoneyHelper is a free, government-backed service, offering clear, impartial and specialist guidance on your retirement options. If you're aged 50 or over, this service is available to you. Visit moneyhelper.org.uk/pensionwise or call 0800 138 3944 for full details of the service. We strongly recommend that you seek financial advice if you are unsure which options may be right for you. There may be a charge for this advice. Please read the screen to see how you can find a financial adviser.

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As a member you will have access to an online account making it easier for you to plan and save for your future. In addition to giving you information about your pensions value and where your money is invested you will also have access to our tools and calculators.

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There are various next steps for you to consider. Please pause and take a moment to read the information on the screen before moving on.

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Thank you for listening we hope this presentation has been useful.