Pension Advice helps to ensure you can retire on your own terms

Pension Advice and Retirement Planning provides you with the greatest opportunity to have the retirement you want, retire when you want to and being able to afford a comfortable lifestyle. Yet many people leave this kind of financial planning until later in life.  After all, in the long list of most people’s financial priorities, letting your longer-term plans slip by the wayside can be easy to do when there are mortgages and bills to pay.
When it comes to the best Pension Advice and Retirement Planning, it’s always best to save as much as you can afford from as early in your career as possible and to manage and monitor how your money is invested to ensure it works hard for you. The long-term effect of growth can be substantial and can make a significant difference to the quality of your life after work. Taking control of your pensions and thinking ahead lets you optimise your plans so you know whether you are on track.

What does Pension Advice and Retirement Planning involve?

Pension Advice simply refers to the process of taking financial advice on your pensions whilst you are still saving towards your retirement. This may be to understand whether you are paying enough in, investing in the right funds, in the right pension scheme, able to achieve a better result by transferring pensions or combining them, or taking tax advice if you are at risk of overfunding your pension. Because your retirement isn’t something to be messed with, this kind of advice should be given by a highly qualified financial adviser or wealth manager such as a Chartered Financial Planner.
Retirement Planning refers to the process of taking financial advice to plan your retirement and arrange your pensions in the best way to support your lifestyle. For example, you may want to retire as soon as you reach a certain age or want to reduce your working hours gradually. You may need to take a lump sum of money, prefer the security or a regular monthly income, or need income from time to time. The great news is that, however specific your plans are, retirement planning advice can help. Pensions have become far more flexible in recent years, offering far greater choice. A Chartered Financial Planner can identify which arrangements are right for your circumstances, ensure you receive income in a tax efficient way and provide ongoing management to ensure your nest egg will last you through your retirement years.

What are the key Pension Advice considerations?

Your pension is usually the most effective way of saving for the long term. This is all but guaranteed for UK employees, all of whom must be given access to a Workplace Pension Scheme by their employers and, in many cases, employers must contribute towards your retirement if you pay in too. Additionally, taxpayers will also receive tax relief at their highest rate of tax, meaning you can get an instant boost every time you pay in. Here are some of the key Pension Advice areas you may find you need to take advice on:

When can you afford to retire?

Knowing when you can afford to retire if often the question people put off asking. But the earlier you can get to grips with your current financial position and identifying any gaps in your pension funding that need to be made up, the better opportunity you have of having the retirement you want.

Knowing if and when you can afford to retire will normally involve talking to a financial adviser about:

  • Your current pension funds
  • How much you pay in, and any employer contributions you also receive
  • How far you are away from your desired retirement age
  • The kind of lifestyle you envisage in retirement
  • Where your contributions are invested and how they are performing

Your financial adviser can build a clear picture based on these factors and will work with you to draw up a realistic plan. For example, if you want a comfortable retirement but your pension savings are unlikely to support the lifestyle you want, you may need to retire later or pay in more.

Projecting when you can afford to retire with any degree of accuracy can be tricky, especially if you have more than one pension. However, your financial adviser should have access to financial modelling tools to give you a clear picture.

Is your pension scheme offering value for money?

All pension schemes will have a range of charges used to pay for the costs of running the scheme. Although there may be a range of different charges, one of the main ones that can impact on the growth of your pension pot is the Annual Management Charge (often abbreviated to ‘AMC’). In recent years, competition amongst pension providers has increased significantly and regulation has driven down the average charge you can expect to pay on modern pension plans. It can be worth shopping around as you may find a better pension scheme than your existing one for a much lower overall cost.

What features, benefits and access does your pension offer?

Just like your bank account, pensions are now far more accessible than they used to be. Getting access to information about your pension pot used to be limited to receiving an annual pension statement – no wonder people found it easy to forget about their pension savings. Today, providers offer online access to your pension pot, smartphone apps, and the ability to administer your scheme and investments using technology.

Features and benefits have also expanded dramatically too, with many modern pension plans offering far greater flexibility over how you can access and draw your pension in retirement that older schemes do not provide.

What is your tax position?

Pensions are the most tax effective means to save for the long-term and the cumulative effects of tax relief can help many people grow a nest egg that will help them live a more comfortable life in their years after work. However, the tax regulations that apply to pensions can be complex. Without the right pension advice, you may lose out. The key issues here are to ensure you are claiming your full tax relief if you are a higher rate tax payer and, if you are a very high earner with large pension savings, ensuring you do not exceed the maximum allowances available, which can result in a hefty tax charge.

Does transferring your pension or combining multiple pensions make sense?

Depending on the terms of your existing pension arrangements, the value they provide, the features and benefits, investment options and your future requirements, it may be worth changing providers. This may mean moving one or combining multiple pensions. Because pension rules and regulations have changed so much over the years, it’s important you take the advice of a financial adviser. Older schemes sometimes offer guaranteed benefits and other specifics that are not available elsewhere. You can read more about Pension Transfer Advice here or, if you are considering a Defined Benefits Final Salary Pension transfer, you can read more here.

Is your pension invested in the right way?

Depending on the kind of pension you have, you may have access to a range of different investment funds to choose from. These are often designed to offer choice to people who have different appetites for investment risk, from cautious to adventurous, or they may offer different choices of assets. If you have a Workplace Pension and you were auto enrolled into it, it may be that you have never selected an investment and you were invested into the scheme’s default investment.

Choosing the right investment funds ensures your money is invested according to your wishes, your attitude to risk, and with consideration of your likely retirement age and retirement plans. As your pension pot grows bigger, ensuring your investment strategy is appropriate and performing well becomes more and more important. Speaking to a financial adviser who can assess investment performance and help you quantify your attitude to risk can ensure your pension is best placed to perform well.

What are the key Retirement Planning considerations?

Once you reach retirement age, you will have to make some decisions about how to use your pension. You can draw your pension anytime from 55 years of age, an age set by the government. Your options will depend on the kind of pension scheme you have. For example, a Defined Benefits Pension (also known as a Final Salary Pension) will most likely have a specific retirement age and pay you a regular monthly income. Other pension schemes will leave you to take the decisions about how and when you retire.
Some of the key Retirement Planning options include:

Keeping your pension:

Even when you reach your pension scheme’s ‘Default Retirement Age’, you don’t have to draw your pension if you don’t want to. It may be a good time to review it and make sure it is invested appropriately, but you can continue to pay in and leave your nest egg to grow.

Cashing in your pension:

If you have other income that you can rely on in retirement, you may consider cashing in smaller pension pots. Normally, the first 25% is paid to you free of tax and the remaining amount will be taxable.

Using your pension fund to buy a regular income (an annuity):

You can use some or all of your pension funds to buy an annuity, which is designed to provide you with a regular guaranteed income. A financial adviser can help you shop around for the best deal and talk you through the various options.

Accessing your pension as and when you need it:

If you want to reduce your working hours without retiring completely, or you have other incomes that you only need to top up from time to time, modern pension plans and retirement accounts allows various ways to access your pension pot flexibly when you need to. These offer the greatest flexibility but will need to be managed carefully. A financial adviser can ensure your pension is well managed so your investments are appropriate and you don’t end up paying more tax than you need to when you choose to draw from your pension.

A Warning: Be ScamSmart – don’t fall victim to scams!

Because pensions are an efficient way to save for the long term, your pension pot may be one of the biggest financial assets you have. This could make you a target for scammers, so it is crucial you check who you are dealing with and know where to check if something doesn’t seem right. Always be alert to these warning signs:
  1. Reject unexpected offers: Be wary of cold calls – they are completely illegal
  2. Know who you are dealing with: When it comes to transferring large sums of money from your pension, always deal with a registered, professional financial adviser
  3. Check any contact details you are given: Some scammers ‘clone’ legitimate financial advisers’ websites to pass themselves off as the real thing
  4. Don’t be rushed or pressured: When something sounds too good to be true, it probably is. There should never be a need to rush – financial advisers are paid to get things right for you and ensure you feel comfortable and in control
  5. Get impartial information: Don’t let someone tell you what to do and take time to understand your options
We want you to plan your retirement securely and with confidence. If you are dealing with Creative’s Wealth Management team, you can rest assured that we are registered and regulated by the FCA, are Chartered Financial Planners, which puts us amongst the most qualified in the country. To find out more about identifying pension scams, visit the Financial Conduct Authority’s dedicated ScamSmart website or contact us for help.

Creative’s Pension Advice can make happy retirement a reality, not just a dream

Creative’s Wealth Management Team of Chartered Financial Planners and Financial Advisers provide comprehensive Pension Advice and Retirement Planning Advice. We can access all UK providers to ensure you get the best value and best terms available and give you impartial, expert advice on your pension investments, tax position and a better understanding of how your pensions work. When you’ve worked your whole life for a retirement you want to enjoy, be sure you can make the most of it – talk to Creative today.

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