Mind the Gap: Some pensions could derail your retirement plans…

Mind the gap warningin the London underground

Defined Benefit pension schemes are traditionally recognised as being generous and reliable. Providing a set, index-linked amount of pension on retirement plus other enhanced benefits. Typically these pension schemes have become more expensive for organisations to offer, particularly because of increased life expectancies.

All change

So, if you have a Defined Benefit scheme, you might consider yourself lucky. Or are you? Despite the pensions reforms of April 2015 – which allow savers to access their pensions at age 55 – Defined Benefit schemes still defer to the scheme’s own rules. As a result, many people who have a Defined Benefit pension may not be able to get their hands on the benefits until they are 60 or more unless it is under ill-health or they pay a penalty, leaving many disappointed savers with longer to work or with retirement years to fund.

Add to that the fact that some schemes have pushed the dates back anyway – particularly for public sector workers and many people find themselves with a gap. Their planned retirement date was 55 and now there is a gap of several years which need to be either worked or financed to make ends meet unless they are willing to pay a penalty for taking funds early (unless they retire under ill health). This becomes especially relevant when a couple have planned to retire at the same time and have perhaps made plans to travel, start a business or pursue another ambition.

Mind the Gap

That gap – the period where the pension is not yet available – can be managed in a number of ways, but it needs to be planned.

  • Do you work?
  • Do you work part time?
  • Can you afford not to work?
  • How can you use your collective assets to work around the problem?
  • How important is it to you to stop working?
  • Have you made plans that coincide with your spouse retiring at the same time?


Finding out the answers to these questions is step one on a journey to a better retirement. After all, knowledge is power, isn’t it? If you plan your journey carefully and know where you’re going you’re more likely to make the right decision along the way.

Have a timetable and stay on track

If you have a retirement plan you will often be able to react to situations like these with enough time to minimise their impact. Just like a train journey, there is a start point (where you are now) and an end point (when you can retire) and once you recognise that, you’ve begun the process.

Retirement plans can be started as early in your working life as possible, but we usually find that people start to become interested in them in their early 40s.  Their discovery of the concept of a retirement plan usually comes from a question of how well someone’s pension is performing. That is how most people see retirement, before we paint the bigger picture for them and explain that a pension is just one possible element of a retirement plan.

A good retirement plan uses financial modelling to plug in values of assets – like shares, ISAs, pension, property and businesses – to name a few. It predicts the performance of these assets over time.

 A very good retirement plan will also look at the numbers associated with what you want to do in retirement and what that might cost.

An excellent retirement plan will match the two, address solutions to any gaps, give a predicted retirement date and be reviewed annually – keeping you “on track”.

Avoid delays

Whether or not you have a Defined Benefit Pension, a Defined Contribution Pension, a private pension or indeed no pension at all – the rules remain the same: Know where you are. Know where you want to go.

Talk to us and we’ll help you plan the journey. We use the principles of Lifestyle Financial Planning and Financial Modelling to help people in their 40s and 50s plan the best retirement possible. So avoid a delay to your retirement and contact us to find out more about our specialist methods of retirement planning.

Start your journey

Download the free guide “How much money do I need to retire?” – click here