This weekend sees a new era for pensions arrive as many of the restrictions on how a pension fund is taken are scrapped.
When the reforms were announced just over a year ago, George Osborne promised free, impartial advice for everyone and while this hasn’t happened, there are still a number places to turn to for information on the changes. The Government website www.pensionwise.gov.uk, won’t give specific advice, but will be a source of information that should help people with the simple questions that need to be answered.
The Money Advice Service, and the Citizens’ Advice Bureau also won’t give advice but should be another useful source of information.
For those people who want actual advice, there is a number of options.
The Personal Finance Society website www.findanadviser.org allows a postcode search for nearby financial advisers that specialise in retirement planning. The IFA search site www.unbiased.co.uk also provides a list of local advisers, while a more recent adviser search service www.vouchedfor.co.uk works a bit more like tripadviser, by listing the most highly rated financial advisers, based on their reviews.
One of the concerns is that people may end up paying significantly more tax by doing the wrong thing. For example, taking too much out of a pension in one year could result in 45 per cent income tax being paid as well as potentially 40 per cent inheritance tax on the same money.
Another concern is that people may be taking too much risk with their pension pot, especially with a General Election around the corner, as in many cases the UK stock market falls around election time.
There is also a concern that without proper financial planning, pensioners will run out of money in retirement by overspending and underestimating their life expectancy.
A number of financial planning firms, like ourselves, will be running free pension education seminars in the coming weeks to explain how to best take advantage of the new rules and to highlight the expensive pitfalls that need to be avoided.
David Hill is a Chartered Financial Planner and Independent Financial Adviser at Hills Financial Planning, 15 Agnew Street, Larne. For details of free pension education seminars ring 028 28276814 or email: firstname.lastname@example.org