It’s a tough call for retirement savers to make the right financial decisions when so many pension and care issues are in a state of flux.
Chancellor George Osborne will not give final clarification on his Budget 2014 pension reforms until April 2015 – although he should reveal many of the final details before then.
Meanwhile, the government is still considering caps on contributions to long-term care.
While these important variables are yet to be confirmed, those approaching retirement sill have to make the best decisions they can with the information available.
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So here are 10 pension tips to help make more of that pension cash:
- If you are moving to another country as a permanent resident, consider consolidating any UK pensions into a single tax-efficient Qualifying Recognised Overseas Pension Scheme (QROPS)
- From April 2015, retirement savers outside public or civil service schemes have more control over their pensions. The first 25% can be taken tax-free and the rest spent as you wish subject to tax
- Think about whether you really need to take state or private pension benefits when you retire or if the date is different, when you stop working. Don’t forget to look at any penalties for delaying the decision
- If you have a small pot pension of £10,000 or less, or three small pots worth less than £30,000 together, you could take all the cash subject to tax
- If you are looking for income, drawing down your pension cash and investing elsewhere with higher returns is one option, but annuity providers are introducing new products to lure some of that cash back into their coffers, so look at their rates as well
- Consider your options but factor in the cost of delaying a financial decision as you will lose a year of income if you wait until April 15, 2015 and that cash may be impossible to replace or take years to make up
- Think about longevity, providing for your partner and spreading your money over at least 20 years of retirement
- Factor in rises in the costs-of-living which could erode the spending power of a guaranteed fixed return income from an annuity or similar investment
- Shop around for advice – use comparison sites, the government’s money advice service and other resources
- Consider paying for independent financial advice – an IFA may have retirement income solutions you may not have considered
The starting point is finding out how much money is in your pension fund and how and when it is accessible, so call your provider for a statement to start the ball rolling.
