With just weeks to go until the new freedom and choice in pensions options become available, it is time for an update.
Whilst we wholeheartedly support the new choices and options available there are some important warnings to note;
-There are said to be only two things that are certain in life “death and taxes” and both of these apply to the new choices.
Anything in excess of the much loved 25% tax free cash lump sum is going to be taxable and for most people that might result in more tax dedicated that would be the case if they took their pension pot in stages;
-In respect of death the are two things to note; first, be very careful about spending all your pension pot too quickly. If it runs out before you die what will you live on in the future?
Secondly, death benefits inside a pension pot tax wrapper are highly inheritance tax efficient but as soon as you move your money out of your pension pot tax wrapper and into, for example, a cash account it will form part of your estate for inheritance tax purposes;
-You may not get to enjoy your pension it monies if it falls into the had a of scammers.
Watch out for pretend advisers who have that “guaranteed double digit” investment in Brazilian Teak Forests or Overseas Hotel Developments just for you. The only winner in those investments will be the scammer!
-Watch out also for those less than obvious scammers who are going to spot that you have suddenly come into a lot of money and will have a sales pitch prepared for you. If you are going to take your pension pot only do it if you have real purpose;
-You are going to hear a lot from now on about the Government guidance scheme called Pension Wise (delivered via the Citizens Advice Bureaux and The Pensions Advisory Service.
You should note that this service is not Advice and will not be telling you what you should do, only what choices are available to you.
The Government will try to claim credit for the Pension Wise service but conveniently forget to tell you it is not paid for by them but by a levy on financial services firms.
Our advice is as direct as it is obvious. Forget guidance and go for authorised and regulated financial advice and only ever use an adviser who is on the FCA register.
