Getting the right advice will safeguard your financial future
The increase in families investing their pension pots without taking the appropriate financial advice could see savers running out of money in retirement.
Since pension freedom reforms were introduced in 2015 for Defined Contribution (DC) pension arrangements, there has been a significant shift from people using their retirement savings to purchase an income in retirement (an annuity) to the more flexible drawdown option, where income can be drawn as required in the form of lump sums. The record-low interest rates have also made annuities more expensive, adding to the migration away from that type of pension product.
The new flexibilities do not extend to Defined Benefit (DB) pension arrangements. Some DB scheme members have transferred their benefits to DC arrangements to taken advantage of the changes in legislation, however, it is mandatory to demonstrate the appropriate financial advice has been provided before a transfer valued in excess of £30k can be completed.
Using the greater flexibility now available may be the right decision to make, however it is critical you get the appropriate advice and understand all aspects of the decision you are making.
Pensionwise, a free service provided by the Government, is available to help you understand your options. You can visit their website at www.pensionwise.gov.uk
You may also wish to talk to an independent financial adviser. If you do not have one you can find details of financial advisers in your area by visiting www.unbiased.co.uk
