For workplace pensions, getting the savings part right is relatively straightforward if you stay within a workplace scheme, use your maximum allowable allowance and maximise your contributions permissible under the scheme rules.
But perhaps one of the more difficult things to consider for the average person is what to do with the money once they reach 55 or they reach the age at which they wish to retire and start taking their pension.
Matthew Connell, director of policy and public affairs for the Personal Finance Society, calls this a "massive issue to decide upon", as there are so many more options to consider.
With pension freedoms now offering so much choice: remain fully invested, opt for full encashment, partial encashment, annuitisation, drawdown or a combination of any of these, it is understandable that clients will need to know how to factor their workplace pension into their retirement plans.
So what sort of questions do advisers get asked frequently when it comes to the end of the accumulation stage and towards the decumulation stage of a workplace pension?
Mr Connell comments that a starting point is for advisers to try to cover the "two most important bases".
These are:
- Have the bedrock of guaranteed day-to-day income to cover essential bills, either from state pensions, payments from a defined benefit pension, annuity payments or a cash reserve.
- Invest where you have the ability to commit funds for the long-term.
But sometimes clients do not even know what to ask in order to cover these bases. Here are the top questions asked as clients enter decumulation, according to some advisers we questioned.
What are my pension options?
For Chris Daems, director at Cervello Financial Planning, one of the most common questions he gets from new private clients as they approach decumulation is "What are my options?"
"I say new clients, as opposed to existing clients, as typically answering questions like this are part of our onboarding and review process," he explains.
Nathan Long, senior pensions analyst for Hargreaves Lansdown, comments: "What are my options? – This one is often prompted when people approach having been told by their existing provider that they cannot just take the tax-free lump sum."
What am I doing in retirement?
Chris Budd, chairman of Ovation Finance, comments: "First, [I ask clients] what are they actually going to be doing in retirement? Many haven’t thought about it.
"It is important to be pulled, not pushed, for them to have something to look forward to. Many others have made assumptions about their finances, and built their retirement around those assumptions."
Mr Long agrees. "Overall the most common questions tend to focus on how people can use the flexibility of pensions to suit their lifestyle."
This is more important than ever, as demographic changes have blurred the edge between working life and retirement, meaning people are living far longer, in better health.
Mr Long adds: "Elongated working lives, coupled with trends of older people tending to be more inclined to work part-time or self-employed makes flexibility a necessity, not a nice-to-have."
