Most of us need help with the complicated rules that govern how and when to draw money from a pension and finding the right pension advice as an expat is never a easy.
Anyone looking forward to a comfortable retirement with a gold-plated final salary pension is lucky.
They have a guaranteed income that increases with the cost of living for the rest of their lives.
For everyone else, the future is more uncertain, and that makes finding the right advice vital.
Before pension freedoms were introduced in 2015, the decisions were a lot simpler – take the tax-free lump sum and invest the rest in an annuity that paid a regular income.
But since then, the choices have dramatically changed as plunging interest rates have seen the cash paid by annuities bomb and providers leave the market as savers snubbed them.
Pension freedoms give some more options from the age of 55:
- Take the money to spend
- Buy an annuity
- Draw a regular income
- Draw cash as and when the money is needed
- Leave the fund invested
To complicate matters, anyone with total pension savings of £30,000 or more has to take professional guidance before taking any money.
Advice and guidance are not the same in the world of pensions, although most people interchange them.
Advice comes from a licensed professional who will give recommendations on financial services and products. Independent advice comes with a price tag – generally starting at an average £150 for an hour’s work.
The final bill depends on personal circumstances that dictate how much time is spent on the job.
Guidance is offered by the government’s free Pension Wise service over the phone or face-to-face to anyone over 50 years old wondering what to do with their retirement savings. Specialists will lay out a saver’s financial options but will not recommend a strategy or products.
Expats are at a disadvantage if they have to seek pension guidance as they may not have access at a reasonable price to advice or guidance when overseas.
The government is looking at how to rectify this and may exempt expats from the need to take guidance.