Pension Hub

What is a Pension Review and Why You Need One

Published on October 16, 2023 • Last updated on March 27, 2024 • About 10 min. read

Written By

Ryan Yeomans

Private Wealth Director

| Ahr Group

A pension review evaluates your pensions, retirement savings, investments, and financial plans to ensure you are on track to meet your retirement goals.

It assesses the performance and suitability of various workplace pension schemes, funds, and investments and recommends any changes that could improve your pension outcome.

What You Will Learn

  • Learn the importance and functions of pension reviews in aligning your retirement plans.
  • Grasp why regular pension reviews are essential, particularly for life changes and British expats.
  • Uncover the benefits of pension reviews, such as maximising retirement income and minimising risk.

A pension review aims to identify any potential shortcomings or areas of improvement in your retirement strategy. Doing so helps ensure that your retirement income and financial security are sufficient and aligned with your retirement goals.

Regular pension reviews are crucial as they account for changes in your circumstances, financial markets or pension regulations.

These changes can impact the performance of your pension funds and the suitability of specific retirement strategies, making it essential to adjust plans accordingly.

Several factors should be considered during any pension review. These include:

  • The current value of your pension pot and investments.
  • Your projected retirement income.
  • The fees associated with your pension plans.
  • Whether you can transfer your pension to a tax-efficient vehicle allowing you to access your funds at a lower cost and in a currency of your choice.
  • Whether you can claim tax-free cash early instead of at retirement age.
  • The performance of the pension funds and their risk levels.
  • Your retirement goals and any changes in your circumstances.
  • The impact of any regulatory changes on the pension plans.
  • How much will your current pension(s) pay you vs. alternative options for your specific scenario?
  • For Final Salary pensions, you will learn whether your pension will inflate with CPI or RPI.
  • For British expats, the implications of living abroad on pension regulations, taxes, and access to pension funds.

Types of Pension Reviews

There are several different types of pension reviews which include:

  • Pension plan review.
  • Pension scheme review.
  • Pension fund review.
  • Personal pension review.

Pension Plans Review

There are two types of pension plans you can have reviewed:

  • Defined Benefit (DB) pension plans
  • Defined Contribution (DC) pension plans.

Defined Benefit Pension Plans (DB)

Defined benefit pension plans provide a predetermined retirement income based on years of service and your final salary.

A defined benefit pension review will involve the following:

  • Assessing your plan provider’s financial health – and if there are any red flags, the possible outcome in the event of insolvency.
  • Outline any potential benefit changes to your plan.
  • Explain the impact of inflation on your retirement income.
  • Analyse your entire financial portfolio, including whether you can access the benefits of the 2015 UK Pension reforms. Due to tax relief on contributions you are being given £20 for every £100 invested.
  • It will outline the benefits of transferring your defined benefit pension to a personal pension if suitable.
  • Make recommendations designed to maximise your pension fund – this may include a pension transfer.

Defined Contribution Plans (DC)

For defined contribution (dc) pension plans, the retirement income depends on your contributions and the investment performance of those contributions.

What you get depends on your earnings history and the value of contributions you and your employer have made.

A pension review for defined contribution plans involves the following:

  • Check all contributions made and where the funds have been invested.
  • Examine the investment options, fees, and overall performance to ensure they align with the individual’s retirement goals.
  • Assess your pension fund’s financial health – and if there are any red flags, the possible outcome of insolvency.
  • Analyse your entire financial portfolio, including whether you can access the benefits of the 2015 UK Pension reforms.
  • If you are a British expat it will check any overseas pension schemes that could maximise your income at retirement (e.g. Qualifying recognised overseas pension scheme (QROPS), Qualifying non-UK pension scheme (QNUPS), or Self-Invested Personal Pension (SIPP).

Pension Scheme Review

Occupational Pension Scheme

These are employer-sponsored pension plans – typically defined contribution pensions – that provide retirement benefits to employees.

A pension review for occupational pension schemes will examine the plan’s funding status, investment performance, fees, and your projected retirement income based on the plan’s provisions.

Group Personal Pensions (GPPs)

Group personal pensions are defined contribution pensions that some employers offer their workers. If you have a GPPs, you and the employer typically make contributions.

Pension reviews for group personal pensions involve assessing the investment options, fees, and overall performance to ensure they align with your retirement goals.

Pension Fund Review

Investment Performance

A pension fund review should evaluate the historical performance and projected returns of the investments held within the pension provider.

This involves comparing the performance to relevant benchmarks and assessing the consistency of returns over time.

Fund Management Fees

Examining the fees associated with pension funds is essential to ensure they are competitive and not eroding investment returns.

The review should compare the fees with similar funds in the market and evaluate the cost-effectiveness of the fund management.

Risk Assessment

Assessing the risk profile of pension funds is crucial to ensure they align with your risk tolerance and retirement goals.

This involves evaluating the fund’s asset allocation, diversification, and exposure to market fluctuations.

Personal Private Pension Review

Self-Invested Personal Pensions (SIPPs)

SIPPs are UK personal pension plans allowing you to make investment decisions.

Pension reviews for SIPPs involve evaluating the investment performance, fees, and suitability of the investments in relation to your risk tolerance and retirement objectives.

Individual Retirement Accounts (IRAs)

IRAs are personal retirement savings accounts available in some countries, such as the United States.

A pension review for IRAs includes assessing the contribution limits, investment options, fees, and tax implications to optimise the account’s growth and minimise tax liabilities.

Individual Savings Accounts (ISAs)

ISAs are tax-efficient investment vehicles available in the UK that can be used for your retirement savings.

A pension review for ISAs includes assessing the contribution limits, investment options, fees, and tax implications to optimise the account’s growth and minimise tax liabilities.

Why Do I Need a Pension Review?

Everyone should review their pensions regularly to:

  • Ensure your retirement goals are being met.
  • Identify gaps in your retirement savings.
  • adjust for any life changes since your last pension review.

Ensuring Your Retirement Goals are Met

Pension reviews are essential to meet your retirement goals. By assessing the performance and suitability of your pension plans, investments, and overall retirement strategy, you can make informed decisions to stay on track towards your desired retirement income and lifestyle.

Identifying Potential Gaps in Retirement Savings

Regular pension reviews can help identify any potential gaps in your retirement savings. By spotting these gaps early, you can take the necessary steps to increase your contributions, adjust your investment strategy, or consider additional sources of retirement income.

Adjusting for Life Changes

Life changes, such as marriage, divorce, or a change in employment, can significantly impact your retirement planning.

A pension review helps you reassess your retirement strategy and make any necessary adjustments to ensure that your pension plans remain aligned with your goals.

Why Do British Expats Need a Pension Review?

There are several reasons British expats should have a regular pension review. These include:

  • Help you understand the implications of different pension systems.
  • Manage currency risk.
  • Address any tax implications for your pension.
  • Explaining how to access your state pension.
  • Seeing If you are suitable for a pension transfer.

Adapting to Different Pension Systems

If you’re a British expat you may find yourself navigating different pension systems in your new country of residence.

Pension reviews can help you understand the implications of these systems on your retirement planning and make necessary adjustments to ensure they continue working towards your retirement goals.

Managing Currency Risk

For British expats, currency fluctuations can significantly impact the value of your pension savings, both in your home and host countries.

Regular pension reviews can help you assess the currency risk associated with your pension plans and investments and make informed decisions to minimise the impact of currency fluctuations on your retirement income.

Addressing Tax Implications

The tax implications of holding pension assets in different countries can be complex for British expats.

A pension review can help identify tax liabilities and opportunities for tax efficiency in your home and host countries, ensuring that you maximise your retirement income and minimise your tax burden.

Accessing State Pension Benefits

You may be entitled to state pension benefits in your home and host countries. Regular pension reviews can help you understand your eligibility for these benefits.

Considering Pension Transfers

As a British expat you may have the option to transfer your UK pension assets to a Qualifying Recognised Overseas Pension Scheme (QROPS) or another suitable pension arrangement in your host country.

Getting expat pension advice can help you assess the suitability of these transfers, weighing the potential benefits and drawbacks to ensure you make the best decision for your retirement.

Pension Review Benefits

There are several benefits to reviewing your pension, these include:

  • Maximising your retirement income.
  • Minimising your risk.
  • Ensuring you are tax efficient.

Maximising Retirement Income

One of the primary benefits of a pension review is the potential to maximise your retirement income.

By regularly evaluating the performance of your pension funds, investments, and overall retirement strategy, you can make informed decisions that help grow your savings and optimise your retirement income.

Minimising Risk

Pension reviews allow you to assess the risk profile of your pension funds and investments.

This ensures that your investments align with your risk tolerance and retirement goals, helping you minimise risk and protect your retirement savings.

Ensuring Tax Efficiency

Understanding the tax implications of your pension plans and investments is crucial for minimising tax liabilities and maximising retirement income.

A pension review can help you assess the tax efficiency of your pension plans and recommend any adjustments to improve tax efficiency.

Your pension will be a primary source of income when you retire. So you need it to work as hard as possible now, so you and your loved ones can enjoy a comfortable lifestyle, at home or abroad.

Ryan Yeomans

Private Wealth Director

Why Have a Pension Review?

You should have a regular pension review, so you can:

  • Be confident your pension is on target.
  • Ensure your retirement is financially secure.
  • Keep up-to-date with the changing pension landscape.

Confidence That Your Pension Is on the Right Track

A pension review ensures your retirement plans are on track and that you are making the best possible decisions.

Regular reviews keep you informed about your pension’s performance and give you the confidence that you are on the right track to secure a comfortable retirement.

Your pension will be a primary source of income when you retire. Therefore, you need your pension to work as hard as possible now, to enjoy a comfortable lifestyle, whether at home or abroad, once you retire.

Financial Security

By identifying potential gaps in your retirement savings, minimising risk, and maximising retirement income, pension reviews contribute to your overall financial security.

Regular reviews help ensure that you are prepared for retirement and that your pension plans are sufficient to maintain your desired lifestyle.

Staying Informed about Pension Changes

Pension regulations and market conditions can change over time, impacting the performance and suitability of your pension plans.

Regular pension reviews help you stay informed about these changes and make any necessary adjustments to ensure your retire

How Often Should I Request a Pension Review?

It’s recommended to have a pension review every few years or when significant changes in your financial situation or pension regulations occur.

This helps you stay informed about your pension, get a good estimate of your pension transfer value (CETV) and make necessary adjustments to align with your retirement goals.

Finding the Right Adviser for Your Pension Review

To find the right adviser to help with your pension review, you should consider the following:

  • What are the advisers credentials and experience.
  • Do they have a transparent fee structure.
  • What are their reviews like?

Credentials and Experience

Ensure the pension review financial adviser you choose has the qualifications and experience to provide the best advice.

Look for financial advisers with relevant qualifications, such as Chartered Financial Planner status or a diploma in regulated financial planning.

Additionally, consider the pension expert’s experience in pension reviews and their familiarity with UK pension regulations and schemes.

Transparent Fee Structure

Understanding the fee structure of the pension review adviser you choose is crucial. Opt for a provider with a transparent fee structure that details any charges associated with the review process.

Quality of Their Reviews

Customer reviews are vital in understanding any adviser or advisory’s suitability to do your pension review. Look for providers that offer prompt communication, accessibility, and a willingness to address your concerns and answer your questions.

Reading reviews and testimonials from previous clients can help you gauge the quality of a potential pension review provider.

Get a Complimentary Pension Review

AHR Group offers a complimentary pension review report compiled by one of our dedicated and fully qualified pension review experts. The pension review process includes:

  • A comprehensive assessment of your total retirement income, considering all pension plans, investments, and other income sources.
  • A thorough examination of your retirement goals, such as your desired retirement age, lifestyle, and specific financial objectives, ensures that pension plans and investments are tailored to meet your needs.
  • Expert advice on tax implications, aiming to minimise tax liabilities and maximise your retirement income.

Key Takeaway

A pension review is a vital process that evaluates the performance, suitability, and overall effectiveness of your pension plans, investments, and retirement strategy to ensure alignment with your retirement goals.

We have emphasised the need for regular reviews to adapt to life changes and identify potential gaps in retirement savings, especially for British expats navigating different pension systems, managing currency risk, and understanding tax implications.

We recommend conducting pension reviews every few years or during significant changes in financial situations to help identify potential gaps in retirement savings, minimise risk, maximise retirement income, and adapt to life changes or regulatory updates.

In summary, pension reviews are essential to achieving financial security and a comfortable lifestyle in retirement.

Speak to an Adviser

During this complimentary 15-minute call, we will:

  • Understand your goals and challenges.
  • Explain our approach.
  • Outline strategies that may help your specific situation.

Achieve financial success as an expat with AHR Group.

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