Pension reviews: Five ways an annual meeting could safeguard your retirement plans

Retirement is a chapter that could span one-third of your life or more, and because of this, it requires lengthy, detailed planning.

And, as we’ve written about in our previous article, there are now more options than ever for structuring your wealth in retirement, including fixed-income arrangements and tax-efficient strategies you can put together to maximise your income.

With all this to think about, we understand you might feel overwhelmed – and this is where your Financial Planner comes in. We provide annual pension reviews to clients which can be conducted in person or over the phone, whichever best suits your needs.

Keep reading to discover five key benefits of conducting an annual pension review with your Financial Planner.

1. Ensuring your wealth circumstances line up with your goals

The reason you’re likely worried about your financial situation in retirement is because you want to uphold your quality of life even after you’ve stopped working.

Facing potential sacrifices to your way of living could feel disheartening, so one of the key roles of your Financial Planner is to work out whether your wealth circumstances line up with your retirement goals.

Imagine that your top three priorities in retirement are:

• Remaining in the home you love, rather than downsizing as many do
• Supporting your children in buying their first home
• Being confident you won’t run out of money in your old age.

In your annual review, your Financial Planner would:

• Talk to you about your progress towards these goals (for instance, if you’re planning on using pension wealth to gift a house deposit to your child in the next 12 months)
• Ensure your pension decumulation strategy is still the most tax-efficient and helpful for you and your family
• Review your overall wealth situation and give bespoke advice about whether you can afford your goals within the time frame you desire.

This yearly sit-down could help prevent you from making costly mistakes, and at the same time, give you the confidence to decumulate your wealth at the right pace and live the life you deserve.

2. Measuring investment risk

Pension wealth is almost always invested in the stock market, meaning the value of your pot is likely to rise and fall over time.

If you’re decades away from retirement, you likely won’t pay much attention to the fluctuating value of your pot. But as you get closer to taking your benefits, you might be worried about a sudden downturn leading to the crystallisation of losses.

Fortunately, your annual pension review can address this issue of risk. Your Financial Planner might recommend that you “de-risk” or “lifestyle” your pension pot in the final few years before you retire – some providers even do this automatically on your behalf.

Alternatively, your Financial Planner could suggest that you structure your retirement income differently, leaving your pension invested for as long as possible and using alternative savings, like ISAs, to fund your first few retirement years.

You can read our article about whether you should keep investing in retirement or stick to cash for more insights on this topic.

3. Helping you pay less tax

After the chancellor delivered her Autumn Budget on 30 October 2024, tax might now be on your mind more than ever.

With Capital Gains Tax (CGT) and Inheritance Tax (IHT) both set to rise as a result of the announcements, your retirement plans might need to be reviewed. Plus, the chancellor announced the tightening of several reliefs for business owners, meaning that if you’re planning to sell your business to fund your retirement, you could face a higher tax bill in the coming few years.

And, even before the most recent tax levies were announced, research shows that retirees are paying more tax on the whole.

Two important reasons this is happening include:

• The State Pension is rising to £230.30 a week, or around £11,975 a year, in April 2025, bringing it closer to the tax-free Personal Allowance of £12,570. In short, although many retirees will benefit from a higher income, they could pay more Income Tax too.
• Several tax-efficient allowances have decreased in recent years, including the CGT Annual Exempt Amount, which the Conservatives reduced from £12,300 to £3,000 between 2022 and 2024.

With all this and more pushing retirees’ tax bills up, PensionsAge reports that by 2028, 1 in 5 retirees will be dragged into the higher- or additional-rate Income Tax brackets.

That’s why your annual review is so beneficial. During this chat, we’ll take stock of the events that occurred in the last 12 months, coming up with new strategies to tackle fiscal policy changes if necessary.

We’ll also take a long-term view of your tax situation and come up with a financial plan that minimises tax and maximises your quality of life.

4. Keeping your estate plans on track

Whilst assessing how much you have to retire on, you might have one topic at the back of your mind: your beneficiaries’ inheritance.

Leaving a legacy to your loved ones may be of high importance to you. In this case, your Financial Planner will include your estate plan as part of your overall retirement plan, checking in on this during your annual review.

It’s easy to assume that your inheritance plans are set in stone, but your circumstances could change and necessitate a discussion in your annual review.

For example, you could:

• Get divorced and share your pension(s) with your ex-spouse
• Welcome a grandchild into the family and offer financial support
• Sell a valuable asset that you planned to leave to loved ones, like your home, freeing up cash but complicating your estate plan
• Decide to purchase an annuity or a similar fixed-income product for greater stability
• Earn more than you expected on an investment, such as a rental property.

What’s more, events outside of your control could affect your inheritance plans.

In the Autumn Budget, Rachel Reeves announced that from April 2027, pensions would form part of a person’s estate for IHT purposes. At the time of writing, they do not usually form part of an estate for IHT purposes. If you had planned to leave your pension as a tax-free asset when you pass away, this may no longer be possible.

So, including estate planning in your annual pension review could be more crucial than ever.

5. Providing much-needed reassurance

Sometimes, your annual pension review may simply consist of a reassuring chat with a professional who has your best interests at heart.

Your Financial Planner is there to act as a confidant as well as an adviser. If you’re concerned about world events or personal circumstances that could throw a spanner in the works of your retirement plans, we’ll offer data-driven guidance.

Get in touch to speak to a Financial Planner today

If you’re already a client here at PenLife, you can contact your Financial Planner directly to discuss any element of your financial plan. You can also refer a friend who you feel would benefit from our services.

If you’re new here, welcome! Email us at enquiries@pen-life.co.uk, or call 01904 661140 to book a chat with a Financial Planner.

Please note

All information is correct at the time of writing and is subject to change in the future.

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning, cashflow planning, will writing, or tax planning.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation, and regulation, which are subject to change in the future.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.