The Irish Times - Tuesday, March 20, 2012

Maximising your retirement income is an important business so no opportunity should be ignored, writes CAROLINE MADDEN

1 BUMP UP YOUR CONTRIBUTIONS BUT ONLY IF YOU CAN AFFORD IT

The single biggest factor in determining how much youll have to live on in retirement is the amount you contribute to your pension pot. And due to the power of compounding which is essentially growth on growth the earlier you start paying into a pension, the better.

However, before you commit every last cent to your pension, its important to step back and make sure its the right choice. Munro ODwyer, pensions director at PricewaterhouseCooper, points out that it makes little sense to maximise your pension contributions if doing so means youre not paying off your 15 per cent APR credit card bill, or it puts you at risk of missing loan repayments which can damage your credit record and create a financial cost in the future. So its important to achieve a level of balance between providing for the future and surviving in the present.

2 PUT THOUGHT INTO THE ASSET-SPLIT

Gary Connolly of iCubed investment consultancy says one of the key decisions that will determine the performance of your pension portfolio is the asset allocation, ie how your pension assets are split between equities, bonds, cash and various other asset classes.

When an employee join an occupational pension scheme theyre generally given a choice between low, medium and high-risk funds, and what you choose on that first day could have a significant effect years down the line. If you dont tick any box, youll most likely be put into a default fund, which may not reflect your preferences or attitudes to risk, so its worth making an effort to understand the different investment choices available to you.

So how to decide? Connolly says the rule of thumb is that the longer you have to retirement, the more risk you can take. If youre 25 with 35 years to retirement... you can afford to take as much risk as there is available to you, as its such a long time period and theres very little in your fund. However, somebody in their late 40s or early 50s with a large amount in their pension relative to what theyre putting in, then thats a different situation and they need to take cognisance of what their expectations are for their income in retirement.

3 QUIZ YOUR FINANCIAL ADVISER

Read the original here:
Ten ways to boost your personal pension pot