As a result of the once-in-a-generation shake-up of the pension system, there has never been a greater need for financial advice when it comes to planning your future.
There are various sources of information to help you understand the options available. The Government has launched its free pension guidance service, Pensions Wise, which can give guidance online, on the phone or face-to-face. There is also the range of educational articles and real-life examples and forum discussions here on retiresavvy.
But Pensions Wise and retiresavvy can only offer information and generic detail about the options available; if you want or need more in-depth personalised advice, you will need to look elsewhere.
The difference between guidance and advice
It’s important to understand the difference between ‘guidance’ and ‘advice’ – guidance, as offered by Pensions Wise is a useful starting point for understanding the choices you face around using your pension. It can explain what options are available and their consequences, but it cannot give specific recommendations about what to do based on your unique circumstances, and importantly, there are no redress rights.
If you need to seek financial advice, you will need to speak to a qualified, professional financial adviser, and this will involve a more in-depth, thorough assessment of your individual financial situation and aspirations. At the end of the process, you will be provided with personalised recommendations.
Speaking to a financial adviser could be necessary for your situation; as the choices you make with your pension fund will go a long way towards determining your quality of life in retirement and, with it, the rest of your life.
Why advice is important
The pension reforms that came into force in April offer more options and greater flexibility with your pensions than ever before. The main benefit for those aged 55 and over is that you will be given full access to your defined contribution pension pot and are able to spend it how you wish. The first 25% will be tax-free, and the remaining 75% taxed at your marginal rate of income tax.
With any newfound freedom and choice comes complexity – mainly because there will be far more options to choose from, and certain consequences to be aware of. To ensure you make the right decisions, it is strongly recommended that you seek professional financial advice.
A financial adviser will conduct a full assessment on your finances and circumstances and then advise on the most suitable option to help meet your future ambitions. They will discuss in detail the pension changes – how you can make the most of the new-found flexibility and how to avoid any potential drawbacks that may arise.
Where to go for advice
If you are retired or approaching retirement and would like to take financial advice, there is a range of options available to you. You can find financial advisors in your area through the website Unbiased.
How are you planning for retirement? Let us know in the comments below of head to the Forum to join the conversation.
Back to ‘Pensions explained’