When the new pension rules of Pension Freedoms came into force in April 2015, fears were expressed that pensioners might raid their pension pots to go on a spending spree through pension drawdown.

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When the new pension rules of Pension Freedoms came into force in April 2015, fears were expressed that pensioners might raid their pension pots to go on a spending spree through pension drawdown.
Since pension freedoms, a pension annuity has experienced something of a drop in popularity. Income drawdown has become increasingly popular, and many people have taken to the idea of being able to access money when they need it. However, it’s worth giving pension annuities a second thought – it might be the best option for you.
You might have arranged a loan, set up a mortgage, or even set up your own business without any help from a financial adviser. It’s tempting to take that approach to pensions – after all, retirement planning is a personal decision. However, for many people, using the services of a pension adviser can be not only helpful in a pension transfer, but also save money.
If you have had a number of different jobs during the course of your working life it is quite probable that you will have acquired a range of smaller personal pension funds. For several reasons, it may be a good idea to merge them into one fund (this is called Pension Consolidation) so that you can keep track of your pension funds and plan for your retirement with greater clarity. If all your pension money is in one fund you will be able to see immediately what your personal pension is worth and to manage your fund to suit your purposes, even while you continue to contribute to the total.
Since pension regulations changed in 2015 and pension freedoms were introduced, it has been possible to withdraw up to 25% of your pension pots as a tax-free lump sum plus giving you options to withdraw your funds when you need them, instead of the traditional route of an annuity which gives you an ongoing regular income.
Many people have found pension drawdown a very attractive option. Pension funds try to make pension drawdown easy to manage and allow people to take chunks of their funds when they please or need a capital sum for a purpose like paying off the mortgage.
Once you approach retirement age, a key decision to make is how to make use of your pension income drawdown. However, your current pension provider may not be offering you the best drawdown deal – and this could be costing you money. Here are three key questions to consider, to help you decide whether your current pension provider is best for you.
Getting a new job is great news but comes with its share of challenges. It may involve a new role, a different commute, or even a total relocation. On top of this, there are also things to organise with your old workplace, like a handover meeting. But have you thought about what’s going to happen to your old workplace personal pension? Amongst all the excitement of changing jobs, it’s important not to lose track of your old workplace pension. Here are three areas you should check:
It’s often difficult to keep track of multiple pensions – not only does this stop you from knowing how much your pension pot is worth, but it makes retirement planning more difficult. Here are some tips to make life easier:
Our article a guide to pension consolidation explains the many benefits of merging multiple pensions. As well as ensuring you get the best potential return on your investment, pension consolidation also helps you to avoid hidden charges from your pension provider, that might be losing you money. For the purposes of retirement planning, however, a key benefit of pension consolidation is easier pension management.
Thanks to pension freedoms, there is now more flexibility than ever over how you are going to take your pension. Pension drawdown has become particularly popular in recent years, but there are still advantages to the more traditional pension annuity.
Income drawdown is the newest option. Your defined contribution pension acts like any other investment as you pay into your private pension and – hopefully – see your investment grow. When you retire, you can withdraw money as and when you need it. The rest of it stays invested in your pension pot to potentially keep growing. A pension annuity, however, allows you to guarantee a regular income for the rest of your life or for a set period of time. The income is always there, and in most cases, you cannot change or cancel if you change your mind.
The end of the financial year isn’t just a date for business owners or people in finance. It’s a great time for you to take stock of your finances and give them a thorough spring clean in preparation for the year ahead. Here are our five resolutions you could make:
This can be found on your payslip, P60 document or letters about tax, pensions or social benefits.
If you have (or have had) a pension that is described below then we can potentially carry-out a Pension HealthCheck.
Defined Contribution Pensions | These are ‘Pot of Money’ pensions where the benefits provided take into account the value of the fund at retirement. They can be personal pensions or Occupational Pensions. There are no guarantees as to what pension will be provided. This will be a reflection of contributions made and investment growth. |
Defined Benefit Pensions | These offer the promise of a guaranteed pension at retirement which reflects the length of service with an employer. It will be based on either the Final Salary or Average Career Salary of the employee. Providing the company is still in existence, there is no investment risk for the pension receiver. This type of pension is becoming less frequent. |
Private Pensions | This is a generic term for pensions that are not workplace schemes. |
Group Personal Pensions | Employer-sponsored schemes – each member has a personal pension plan, and their contract is with the pension provider. The employer’s role solely is to select the scheme provider, decide if there should be any restrictions on fund choices and take contributions from the employee’s pay and forward them with employer contributions to the pension provider. |
Self-Employed Pensions | A private pension arrangement or personal pension is taken out by a sole-trader or self-employed worker. |
SERPS Pensions | State Earnings Related Pension (formerly Graduated Pension and subsequently State 2nd Pension or S2P) was an additional element of State Pension for employees. The amount of pension was linked to the employee’s salary. SERPS was abolished in 2016 when the flat rate State Pension was introduced. |
Personal Pensions | Private pensions are contracts between the pension member and an insurance company or another pension provider. |
SIPP Pensions | These are personal pensions where the member has a much wider choice of investments, including commercial property and single company shares. |
Stakeholder Pensions | Personal Pensions with a set of rules that impose amongst other things a maximum annual management charge (AMC), low minimum contribution levels (£20 per month) and an appropriate Default fund. |
FSAVC Pensions | Private pension linked to an employer’s Defined Benefit Scheme but separate from the Scheme’s internal Additional Voluntary Contribution (AVC) arrangement – largely defunct since the rules were eased several years ago, allowing people to contribute to both personal and employment schemes as they wish. |
Money Purchase Pensions | This is another name for Defined Contribution Pensions. |
Unfortunately, we are unable to help clients who currently work for or have a pension from one of the following:
If you are unsure about the type of pension(s) you hold, please contact us on 0800 756 1288 or email info@pensionworks.co.uk