Cash clinic: How can I ensure that I have enough money for my retirement?

I recently found out that I have to wait 18 months longer than I’d expected to get my state pension.

It is annoying, but it also gives me a bit more time to save money. How best can I ensure that I will have enough funds for a comfortable retirement?

CG, Leven

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A Firstly, consider whether you are happy to wait the additional years until you retire. If not, consider accelerating your pension funding now by making further contributions to either a pension or an individual savings account (Isa), both of which are tax- efficient. Remember, it’s not only a pension that can provide retirement income. Other assets such as property, investments and savings could be used to bolster your “retirement fund”.

If you have no choice but to wait, it’s worth finding out if you have paid sufficient National Insurance contributions, so that you will receive the maximum basic state pension. This is available from between ages 60 to 65 for women, although the state pension age for women is currently rising. You can choose to defer taking your state pension if you wish, thus building up extra entitlement.

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You may also be entitled to an additional pension, known as the state second pension. Upon request, the Department of Work and Pensions (DWP) can calculate the additional benefit due and this is definitely worth asking for. The state pension is, however, unlikely to sustain a sufficient standard of living for the vast majority of people and hopefully, you have been saving into your own or an employer’s pension plan. Consideration should be given to any other savings and investments and these also can be used to fund your retirement.

Most people then buy a lifetime annuity when they retire. This means they transfer their retirement savings to an insurance company who will pay them an income for life. Don’t automatically accept the annuity offered by your pension provider. You’re allowed to shop around for an annuity and you should take advantage, as there’s a big difference between the best and worst deals available on the market.

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However, once bought this product cannot be altered, therefore if health subsequently deteriorates, there is no ability to change to an enhanced annuity.

Insurance companies recognise that ill health or a poor lifestyle means that your life expectancy might be shorter, so they pay a higher income for this “potentially” shorter period of time. So, having to wait to retire may, perversely, work in your favour.

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Q Given the recent fines levied on various banks for mis-selling investments, I’m left wondering whether the investment advice I recently received was to the bank’s benefit rather than mine. How would I know whether I’ve been mis-sold something? What should I do if I was?

AB, St Andrews

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A Typical examples of mis-selling might include placing an investment in an incorrect product, given the clients’ tax position; lack of diversification in assets; or more likely, placing monies into an investment that exceeds the client’s stated risk tolerance. However, every case has to be taken on its own merits.

Initially any complaint should be to the bank itself, either in writing or alternatively over the phone. The bank then has eight weeks (you should normally receive a reply within 14 days confirming receipt of the complaint) to respond. If they fail to do this, or you’re not satisfied with the response you do get, you can take the complaint to Financial Ombudsman Service - call 0300 123 9 123 or email [email protected].

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It will assess whether you have grounds for the complaint and if it does, will request an explanation from the bank. If it finds in your favour, it will order the bank to provide a suitable remedy. This could mean anything from putting right what went wrong and providing compensation to a simple apology. This service is independent and free of charge.

It is vital that no financial institution puts in place barriers to the complaint process. You can ask for a copy of the bank’s internal complaint process to ensure you are aware who to make the complaint to. However, it may still be the case that many investors are wary about making a complaint or indeed the actual way in which to make the complaint.

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A solution may be to speak to an independent financial adviser who can look at the advice received and guide you as to your best course of action.

• Kevin Garfagnini is a director at Mazars Financial Planning

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If you have a question you need answered, write to Jeff Salway c/o The Scotsman, 108 Holyrood Road, Edinburgh EH8 8AS or email: [email protected]