Pensions – Comprehensive advice required
From April 2015, around 320,000 individuals with defined contribution pensions will be able to access their pension savings as they wish, subject to their marginal rate of income tax.
The new pension rules are set to give us all unprecedented freedom when it comes to planning our retirements, but freedom inevitably brings with it responsibilities.
There are many factors that need to be taken into account to ensure a financially comfortable retirement. No-one wants to risk running out of funds in later life, especially not at a time when they may need to pay for nursing or care services.
The Government has announced that guidance will be made available to those over 55 or about to retire, in a face-to-face interview with their local Citizens Advice Bureau. Alternatively, a telephone service will be provided by The Pensions Advisory Service. There will also be information online at the PensionWise website.
However this information is accessed, it will only cover the basic options available on retirement, and will not include personal product or provider recommendations. In-depth personal advice is, without doubt, the key to a financially-secure retirement.
Whilst the Government is offering guidance, guidance and advice are not the same. Everyone approaching retirement deserves the best and most comprehensive advice which looks not only at their pension requirements but at their wider financial planning needs. This should include a review of existing investments and savings, and financial goals, such as passing money on to future generations.
Beware the Scammers
Fraudsters have been quick to seize the opportunities for scams that these pension changes provide. With many policyholders understandably unsure as to what the changes might mean for them, or what the right investment choices for their particular circumstances might be, unscrupulous operators have stepped in to exploit the situation, offering dubious advice and unsafe investments.
The Actuarial Post reported that pension savers are almost three times more likely to receive an approach from bogus or fraudulent operators than they were nine months ago.
The various scams currently being promoted try to persuade those about to retire that they can get a better deal by moving money abroad, or by investing in fictitious or unregulated investment schemes.
In addition, many unscrupulous businesses are offering customers the opportunity to ‘unlock’ their pension for cash before they reach 55, without making them aware of the fees charged for this service which can be as high as 30%, in addition to the 55% tax charge they will incur for taking money from their pension early.
How to proceed
It pays to consult an expert adviser. Here at Logic Wealth Planning we can give you professional and reliable advice. That way, you can avoid paying more tax than you need , making sure you have a strategy in place to secure your pension into the future, and reduce the risk of running out of funds in later life