With the new pension freedoms coming on stream in April, it has never been more important for people to take advice on how to make the most of their money in retirement.
You don’t have to fall victim to a scam – and there are fraudsters out there just waiting to prey on the unwary. You could end up paying thousands of pounds in unnecessary tax or leave your loved ones without support if you make fundamental mistakes.
Everyone is entitled to a free guidance session with The Pensions Advisory Service or Citizens’ Advice. But that is only guidance and there is no substitute for a proper financial plan. Trying to save a few pounds by skimping on advice could cost you dear.
David Woodhouse, Head of Advice Services at adviserChase de Vere has come up with ten reasons that you need proper professional advice.
1.Because more freedom means more complexity and so there is greater scope for people to make the wrong choices
2. To ensure that any pension withdrawals are taken as tax efficiently as possible. Taking too much in the same tax year is likely to incur a bigger tax bill
3. To determine whether your current pension product will be able to facilitate your wishes and if not to evaluate the pros and cons of a transfer to a different, more flexible, product
4. To assess how much of your pension should be used to buy an annuity and so produce a base level of sustainable income
5. To make sure you are taking an adequate level of income while at the same time you aren’t taking so much that you will deplete your pension assets too quickly
6. To consider your pensions alongside other investment assets, for example it could be more tax efficient to take income from cash savings or ISAs than from pensions
7. For recommendations on the best pre- and post- retirement investment strategies to adopt and for these to be reviewed regularly in conjunction with your income and capital requirements
8. To avoid making any costly mistakes, including losing valuable benefits and guarantees, when deciding what to do with existing defined benefit (final salary) schemes
9. To review the options for using pensions as a key part of inter-generational and inheritance tax planning strategies
10. Because these are such important decisions that you shouldn’t make them on your own if you don’t know what you’re doing or if you take advice you must ensure this advice is completely unbiased, unrestricted and in your best interests.
David Woodhouse says: “It is imperative that people take independent financial advice. Those who make the wrong decisions risk not having enough income, not having a sustainable income, paying too much tax and taking too much risk. All of these could detrimentally affect their and their family’s standard of living in the future”.