New pension rules mean reviewing options vital

PROPOSED changes to pension rules in the Chancellor’s recent Budget took the financial industry by surprise.

Most people acknowledge that pensions have changed dramatically in the past few years and with good reason. They were built on a system that saw us work for a single employer, retire at 65 and be dead by 70. But with one in three children now likely to live to 100, the system needed to change.

“The proposed changes, which will allow retirees access to their pension pot in full, is welcome,” says Keith Miller of Capital Managers LLP. “But it is unlikely that it will be in anyone’s interest to extract the full amount at a single point. After all, a pension is a means to provide you with an income through your whole retirement. The new rules will be very useful, allowing a much more generous flexibility which will suit many. But care is needed to manage any pension fund and income, so that they meet with income requirements and tax planning throughout a lifetime.

“We still await finer details on the treatment of the fund on death. But these new rules mean anyone considering paying into a pension will have the knowledge that they can get their money back over their lifetime, without an insurance company swallowing up their pension fund on premature death. Going forward, there will be a greater need to understand your pension and the options available. A plan will need to be adopted, but more importantly regularly reviewed over time, and investment choices and strategy will be seen as an essential part of the retirement planning process.

“For those who have already accessed a portion of their pension, there will be a need to reevaluate their requirements and perhaps amend their retirement strategy for the future.

“On many occasions, there is no single solution for any individual, but with a suite of products and investment concepts available, a range of options can be selected based on individual needs and concerns.

“How to establish your income in retirement can be a complex and challenging process. It is worthwhile exploring all the options as early as possible with expert financial advice.” Contact Keith Miller at Capital Managers LLP, 0141 331 2213.