We all get to an age where we will be looking to reduce how much we work, with a keen eye on retirement plans. It is therefore important to understand the factors that may come to play when looking towards your pension and finances post-retirement.
Your Pension Savings
You have contributed to your pension funds throughout your life with two specific goals in mind: to ensure you have financial security during your retirement and to provide the resources which will allow you to make your later years exactly as you want them to be. They are therefore long-term savings which should really be left alone. But in 2015, the government introduced the Pension Freedoms Act which stated individuals can access their pension pot from the age of 55.
Restrictions On Savings Schemes
Many saving schemes have specific restrictions: some investments have to be left (for instance ISA’s) for a certain period of time before they can be accessed. That money is locked away. If you do access, under the agreed regulations the provider can punish you by reducing the amount of interest you will be in receipt of. Your pension is not accessible until you are 55 and you have to be very cautious as to how and what savings you take out.
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Be Cautious
In the majority of cases, you cannot access your pension before you are 55 (except in rare cases such as severe illness), but it should also be noted that because of the reasons stated above, you should only access your pension with the support of a regulated financial advisor. This is because you need to ensure that the money which still remains invested in your pension will be enough to meet your retirement requirements and that any monies taken from your pot will not be detrimental to you as far as the tax office is concerned.
How A Regulated Financial Advisor Can Help
A regulated financial advisor will offer independent advice in terms of your unique needs, aspirations and financial situation. All schemes have unique benefits and it may be that the pension you have does not allow you to access your savings early (you cannot access all your pension savings – for instance your State Pension or unfunded pensions are inaccessible, however you may be able to transfer savings from a private scheme to a scheme which allows access). An advisor will also take into consideration how those savings may affect your overall income tax status (for example too much money going into your account in any one year could push you above your current income tax level).
Accessing Your Pension Pot Is Not Right For Everyone
It may be that because of your unique circumstances, accessing money from your pension at 55 is not right for you. But by speaking to a regulated financial advisor, you will at least get a clear idea as to where you stand with the money in your pension. Once you are totally aware of all the finance options at your fingertips you can make an informed decision as to which route to take.
If you are considering your pension, speak to a regulated financial adviser like Portafina or, view the info at The Money Advice Service.
