Richard Porter financial adviser St Albans– Get pension advice at retirement

Thursday 1 February, 2018

Richard Porter, pension advisor, IFA, St Albans, Hertfordshire recommends getting pension advice at retirement so you make the best pension choices.  

Your choices at retirement

When you reach retirement you may need to make some big decisions regarding your pension plans.  You may have a variety of pensions – some may be final salary pension schemes (defined benefit pension schemes).  Or you may have defined contribution pension schemes either personal or stakeholder pensions, sometimes referred to as money purchase pension schemes.

All your pensions will have different terms and conditions and a financial adviser can explain these to you so you make the most tax efficient choices now for your retirement, as some decisions may not be reversed later.  

A pension adviser can also explain the different options at retirement. For example do you want to take a tax free lump sum or set up a pension annuity or take pension income drawdown?
 
Read our brochure Your Retirement Options - Freedom & Choice: before, at and in retirement it will help you understand how the new pension changes will affect you and give examples of what you need to do whatever your age and situation.  If you are at retirement read our Retirement Guide as it explains all your pension choices.

Richard Porter, Independent Financial Adviser, IFA,St Albans and member of the St Albans financial planning team recommends getting pension advice.  Richard reviews what you need to consider when you reach retirement?

Reaching Retirement – Get pension advice

Your options at retirement? 

1. Review your Lonsdale Lifetime Financial Plan to ensure your retirement income will achieve your financial goals.
 2. You may want to continue working and want to factor this into your long-term plans. When we review your Lifetime Financial Plan, your Financial Adviser will discuss the following with you: 
Should you take a tax-free lump sum from your pension or not? 
How can you take income from your pension in the most tax-efficient way? 
How can you be flexible in the amount of future pension income you take? 
How to minimise the risk of your investment portfolio? 
How can you pass wealth dependents tax efficiently? 
How should you provide now for later life? 

Case Study

Sam – 65 years old – supermarket manager earning £40,000 p.a. Defined contribution pension scheme – value £260,000. 
Joyce – 60 years old – care worker earning £15,000 p.a. 
No private pension or stakeholder pension but entitled to a full state pension. 
No dependents. £30,000 mortgage on main residence. 
Savings and investments valued at £75,000.

Key Considerations 

1. The couple want to know more about their options at retirement, as they would like to go on a 6-month round-the-world holiday. 
2. Sam wants to continue working part-time but wants to understand the tax implications. 
3. The couple want to pay off their mortgage but aren’t sure if they can afford it.

Richard Porter, Pension Adviser, St Albans, Hertfordshire said:

‘It is important that Sam and Joyce understand how the recent ‘Freedom & Choice in Pensions’ changes will affect their pension options. Before producing a Lifetime Financial Plan and offering pension advice for the couple, I would want to understand their key priorities for retirement planning. I would review their current expenditure and analyse their investment portfolio to ensure they weren’t taking on too much investment risk now they were retired. This would enable me to present different scenarios to the couple. For example, I could demonstrate how they could afford their round-the-world holiday in retirement if they invested their savings more tax-efficiently, and took some of Sam’s tax-free cash from his pension.’ 

Conclusion 

The couple were pleased that by making a few changes to their current investment portfolio they could fund their trip round-the-world. Their Lifetime Financial Plan also showed Sam that if he worked part-time for another 5 years he would be able to pay off the couple’s mortgage while living off his pension income.

For more information read: Deb Nolan - independent financial adviser Leeds / Bradford - Will you have enough retirement income?,  Simon Hawker - independent financial adviser St Albans - Understanding your retirement options, Simon Hawker - When does it pay to seek independent financial advice

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