Your pension could be working harder, says independent financial adviser

ENSURING YOUR pension is performing at its best is not an easy task.

In a complex, confusing and heavily regulated sector that is changing all the time, it is perhaps no surprise that many people have not altered their pensions since they first took it out, despite it being their largest single asset.

But with annuity rates some of the lowest ever recorded, it is now more important than ever to make the most informed pension decisions possible, according to a Yorkshire expert.

Stephen Baxter, joint managing director at Huddersfieldbased independent financial adviser Robertson Baxter, said: “The default choice at retirement for pensioners who haven’t been in an employer’s final salary pension scheme is to take out an annuity. This option provides certainty and security. However, with every up side there is a down side, as this option only provides one fixed income stream.

“On the other hand drawdown schemes have become a viable and flexible alternative.

“This form of scheme tends to appeal to those with larger pension pots, who have a desire to make their nest egg work a little harder.”

He added: “There really are countless options available when retiring, but the skill is in selecting the right option for your individual circumstances.

“If you have funds in a personal pension arrangement or a former employer’s scheme it could be well worth getting them professionally checked to ensure they meet your requirements. For example, if your pension automatically includes a spouse’s pension and you are single – what is the benefit to you?

“You might consider a pension transfer, even if the fund is later used in full to purchase an annuity, so long as you choose the right pension specification for your individual circumstances – such as on a single life basis – it is likely to be a far bigger fund and therefore of greater benefit to you rather than the scheme trustees.”