With pensions being most people’s second-largest asset, they can become a major consideration in any divorce settlement.
It's important to plan ahead for your retirement. Here, we explain why pension planning is so critical, and describe some of the options available to you. This information is intended only as guidance. For advice on your specific circumstances, please get in touch.
We all know it’s important to plan for retirement, but many of us are still not planning well enough. Despite all the media headlines and Government initiatives, many of us still have a ‘tomorrow will do’ attitude. This is worrying for one simple reason – we are going to live longer than most of us think. This article explains further.
Personal pensions may be suitable if you are self-employed, if you are not working but can afford to put aside money for retirement, or even in addition to a company pension.
On 6 April 2015 new pension rules came into force, giving you much greater flexibility over how you use your money purchase pension savings and the options you have in retirement.
The fundamental idea of a personal pension plan is simple. You put money into a savings fund and it hopefully grows in value. At retirement, you have several options which are usually designed to replace some (or all) of your employment income.
Annuities are historically the most popular option in retirement, with a great many looking for the security that they provide. However, it's unlikely that they will continue to account for as high a proportion of retirement income products as they have in the past. This document will explain further.
Points for consideration of Pension Transfers
There is much to consider regarding the real value of Final Salary or Defined Benefit (DB) pension schemes.
In recent years, pension transfer values for these types of plan have largely risen and some individuals have decided, with or without advice, to transfer their protected pension benefits to personal pension / SIPP arrangements from deferred or current employer schemes.
Policy Statement PS18/20 (October 2018 / Improving the quality of pension transfer advice) from the UK regulator, the Financial Conduct Authority (FCA), notes the following:
'While most consumers will be best advised to keep their DB pensions and other safeguarded benefits, we recognise that the pensions environment has changed. This is particularly the case since the pension freedoms gave consumers with Defined Contribution (DC) pensions more options to access their pension savings.
As a result, there has been an increased demand for pension transfer advice, as advice is mandatory under government legislation for potential transfers valued at more than £30,000.'
We hope that the information above is helpful.
Some individuals are attracted by what are perceived to be greater flexibilities in moving away from Final Salary type pension arrangements. However, this is usually at the expense of losing valuable guarantees, and each individual needs to consider many aspects of their personal circumstances before coming to a decision on the most appropriate course of action.
It is vital that individuals understand the underlying pension guarantees, in their various forms, before starting any process, advised or otherwise, of making changes to their employer sponsored pension plans.
There is a cost to pension advice / transfer advice, irrespective of the decisions made as to how future pension benefits will be treated, and this notice is designed to help individuals understand some of the implications before they seek advice and before they incur advice costs.
We are qualified to provide advice in this area and will charge to provide advice if we engage. To speak to an expert adviser please call us on 01494 451441 or email firstname.lastname@example.org