The UK government has liberated us from the pensions straightjacket; pensions freedom means that we can possibly take our money and run. What a fantastic idea, access to all of your pension fund in one fell swoop, no need to choose between QROPS and SIPP, no need to worry about annuity rates or income drawdown so goodbye to the need for serious pension advice.
But wait, aren’t we missing a trick? Doesn’t freedom usually come with a price and shouldn’t we all start acting responsibly rather than just popping down to the Porsche garage and buying the latest model? Perhaps, and maybe just perhaps, the need for expert financial advice and proper retirement planning will become even more important. Surely none of us want to take all of our pension money out of a tax sheltered environment and find ourselves as George Osborne’s best pals, paying 45% tax on the drawdown having taken from the fund and then moving forward not knowing where to legitimately shelter it away from the prying hands of the taxman.
Then there’s another conundrum. Do we need to consider QROPS when a UK pension has suddenly become so flexible? What can QROPS do that SIPP or Personal Pension can’t? Best to speak with an expert financial planner to find out the answer to that; you may well be surprised and as we have always said, when it comes to retirement planning it is all about YOU, your needs, your objectives and your goals.
Is there still a place for annuities? Maybe providers will be forced into manufacturing products that offer real value for money rather than the lottery of having to choose what and when and how long for, with the risk that an early death might lead to a nice little windfall for the provider.
The real aim of a pension fund is to make provision for your retirement needs. Properly invested and managed, a reasonable fund can provide a decent income stream in retirement with maybe something left over for those that you leave behind.
What we would suggest is that pension freedom or flexibility, call it what you will, actually highlights the need for sound and expert advice from an advisory firm that understands you and the legislation impacting on your retirement fund and benefits.
For some, freedom might mean releasing a significant part of a fund and investing in something that will provide greater tax efficiency and more flexibility, for others, quite the opposite might apply and a different type of flexible annuity might well be the perfect solution.
There will likely be a clamour for advice as we move towards the new regime due to take effect next April. We urge you to consider your future prosperity and take some retirement planning advice. Your funds might have to last you thirty or forty years, so an hour spent with a certified financial planner might be time well spent.
For an appointment with a retirement planning specialist contact 900 102 374 or email [email protected]