Being asked to contribute to the Citizens Advice Merton and Lambeth blog after eight months as a Pension Wise guider, I immediately think about why Pension Wise is such a useful service for pension savers.
One important point is that if people have saved into their pension and are reaching the age of 55 they have the opportunity to use their funds for various purposes including providing a regular income or money for special occasions such as a nice holiday, home improvement or any other purpose. Pension Wise can help people think about the best way of taking their money from their fund and keeping a longer term perspective.
While employed, most savers don’t have the luxury of being able to choose when to take their money and how much tax they are going to pay on it. An employee earns, pays taxes, and that’s it! However, once you have pension savings you can decide when and how you take your money. So for example, people are generally on a higher tax band while still working, than when they retire, often only with their State Pension. If they defer taking money until a later date they may be able to get more cash for the same amount of pension fund by paying less tax. These considerations are new for many people and it is a pleasure to make users aware of the effect of tax rates on the amount of money they can get out of their pension.
Being completely impartial is critically important to Pension Wise. Other individuals and organisations often have the proverbial axe to grind. The pension provider has certain products on offer they want to sell and the Financial Adviser will be very keen to plan your whole financial future. We are completely free to guide people for example to the immensely useful annuity comparison tool at the Money Advice Service or the new tax calculator on the Pension Wise website.
By the way, the post pension freedom focus of the press on pensioners driving around town in Lamborghinis using their pension money has faded considerably. People have come to realize that taking all your money out as cash is very inefficient, as it leads to the taxman taking a larger chunk than necessary.
Of course there are still many Lamborghinis on the streets of Knightsbridge but they are driven by oil millionaires and hedge fund managers rather than spendthrift pension savers!
If you are 50 or over and have a defined contribution pension – also known as a “money purchase” pension – call us on 020 3559 7400 and we can arrange a face to face Pension Wise appointment for you.
Pension Wise Caseworker