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Pensions Freedoms

When you have been giving independent financial advice for as long as I have, you find that you have to redefine your understanding of certain words.  The word 'guarantee' has a different meaning in light of the Equitable Life guaranteed annuity rate fiasco, as does 'safe' when used to describe banks.  Pension simplification, as it turns out, wasn't that simple when it was introduced from A day 2006.  It introduced a complex set of rules relating to contribution levels, annual allowances, lifetime allowances and was no simpler than the pensions regime it was meant to replace.

Pensions Freedom which was introduced on 6th April 2015 has generally been welcomed by advisers and the general public.  We have seen a significant increase in interest, not only in people being able to access pensions under the new rules, but also in building up funds in pensions for the future.

Unfortunately, these so called freedoms should carry a warning as there are tax traps and consequences for taking the wrong route. 

Additionally, you may not be able to access the world of pension freedom if your pension provider does not wish to adopt the new rules and introduce products that enable the release of tax free cash and income.  The recent U turn by Friends Life is an example of a major provider who said they would allow customers to access the new options, but then changed its mind.  This isn't freedom, this is more like captivity.

If you believe that the new regime could benefit you, we urge you to speak to an independent financial adviser, as the are best placed to guide you through the maze of rules and regulations, and make sure you make the right choices for the right reasons, and using the right solutions.

This entry was posted on June 8, 2015