Naz Financial

A Personal Financial Blog from Naz Miller

Pension Planning Doesn’t Have to be a Chore.

pension_planning_not_a_chore | Avoid_cut_in_income

Pension planning is often seen by people as a bit of a chore, at best. Especially for the young, it’s seen as so far into the future that it’s not given much consideration. That’s why I’m here. I can help you to understand the need for early pension planning and at the same time, take away some of the less interesting aspects of it all for you.

Pension Planning Working Quietly in the Background

I tend to think about my own pension as being a replacement income for the period when I decide I want to stop working full time. Building up a replacement income should be something that’s easy to effect and straightforward. It ought to be a utility that works seamlessly in the background of your life. It shouldn’t force you to become a specialist. Try thinking of it as like having water and electricity in your home, a basic utility.


Part of the reason that people get put off pension planning is no doubt the language that many so-called experts employ. They can hide behind technical jargon, like different investment strategies or attitudes to risk.

Most of us have a full-time job and families to care for. So, the last thing you want when you get home is to be your own personal investment banker. Also, it’s difficult to outperform the professional investment portfolios already out there. Instead, I recommend that you focus your attention on the big decisions that really can influence your later life. To help you think about this, see my other blog, the Three Phases of Retirement.

A Practical Example of Pension Planning

Consider Sophie. She’s 29 years old and lives in Cambridge. She works as an office manager and earns £29,139 per year, which is the 2018 average earnings for a woman working full time in East Anglia (source: Office for National Statistics, Earnings and hours worked, 2018).

The current maximum replacement income provided by the government at State Pension age is £8,546, just under one third of her current income. This is roughly what she could expect if she had no personal pension. But if Sophie decides to save 8% of her qualifying income over the next 40 years, her total replacement income could then be almost two thirds of her current income.

give yourself more control of your financial future

Is that cut in income going to be a problem for Sophie? That depends on the lifestyle that Sophie wants later in life, whether she’s a homeowner and has access to other savings. It’s not the size of Sophie’s income that will determine if she will feel wealthy later in life, it’s the size of her future expenses. Don’t forget, that many outgoings may have disappeared by the time she’s of pensionable age; her mortgage, for example and her pension contributions.

This is practical pension planning.

If Sophie thinks the cut in income is too big, she can reduce it further by working part-time beyond the State Pension age and/or committing now to save more each month.

In Conclusion

Pension planning should be a basic utility that doesn’t require micro-management. My recommendations are:

1. Don’t opt out, have some form of pension plan in place

2. Start saving early in your working life

3. Don’t worry about investment strategies, talk to a professional financial adviser, like me and delegate the tasks.

Pension planning doesn’t have to be onerous or boring. Let an expert take care of the technical stuff. You just need to make the commitment to do something positive about your future, to avoid an unexpected cut in future income.

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Naz Miller

I'm Naz and I'm a Financial Adviser. Prior to working in private practice, I spent 34 years working at Lloyds Bank in Cambridge and surrounding areas. My work has always focused on helping clients achieve their long-term financial objectives.

Glossary of Personal Financial Terms

AAA Rating

In short, AAA ratings (‘triple-A‘ ratings) are the highest credit rating available for an investment, such as a bond or company.

AAA ratings are issued to investment-grade debt that has a high level of creditworthiness with the strongest capacity to repay investors.

Similarly, the AA+ rating is issued by S&P (Standard and Poor) and is similar to the Aa1 rating issued by Moody’s. It comes with very low credit risk and indicates the issuer has a strong capacity to repay.