People who have come to their retirement age or wish to take benefits from schemes such as personal pensions have various options. Many clients opt to take monies flexibly, however, is pension advice always on the list of requirements?
For example. Former Pensions Minister Ros Altmann explained in a recent interview.
“It is really vital that people considering moving their pension into a drawdown fund check all the charges first, I would recommend everyone to call Pension Wise.The government has set up this free service to help clients understand pension choices and explain the risks of different options’’
The value of the pensions and the income they produce can go down as well as up and you may not get back as much as you put in.
However,figures show that some six in ten people using the reforms to treat their funds like cash machines are being rolled on to their existing provider’s deal rather than shopping around, according to the City watchdog. Experts warned that this means many are not getting the best deal, and are being hit by fees far higher than necessary. This is because in most cases, insurers offer to move savers’ cash into a small range of investment funds - unless the customer makes a special request.
But few savers realise there is a huge difference between the charges on the cheapest and most expensive plans on offer. The difference in charges may not look big, but over time can eat away at your pot. Recently a spokeswoman for the Department of Work and Pensions said:
“Pension freedoms give people choice over how they use their hard-earned savings, but it is important that they are aware of any charges and the tax implications,we introduced a cap on early exit charges to ensure people are not forced to pay higher than necessary penalties for accessing their own money.”
Pension Wise: offer client‘s who wish to have further advice on their pensions the option of a local Financial Adviser who can cast a professional eye on the plans. In real terms a fee may be charged but it could save money in the long run.