By Gary Shield, Independent Financial Adviser

We are increasingly receiving requests from clients to review their pension arrangements. Due to increased job mobility, we now find that many of our clients have accumulated a number of pension plans with different providers.

As very few employers now offer a defined benefit pension arrangement, in many cases these plans tend to be personal pension arrangements in which the employer had previously contributed.

Before we provide advice and any recommendations, we will always write to the providers to obtain more detailed information. Some of the older personal pension arrangements offer guaranteed annuity rates. These plans can provide a high guaranteed income in retirement, which is a feature no longer available with modern pension arrangements. In addition, some providers may apply a penalty if you transfer to another provider. It is therefore important that all the relevant details are assessed so that you can make an informed decision.

However, there can be many advantages in consolidating your pensions and transferring to a modern style personal pension plan.

Generally, modern style personal pension plans will offer a greater choice of investment options when compared to the old traditional plans. As part of our pension advice we will do a risk assessment, to determine which funds and investment strategy will be most appropriate to meet your needs and goals.

Modern style personal pension plans also offer greater flexibility when eventually you decide to draw benefits from the plan. This type of plan can offer income drawdown, which will allow you to draw lumps sums and income in a tax efficient manner. Many of the old plans only offer you a choice of purchasing an annuity which is a fixed income for life or encashing the plan in its entirety. You should be wary of encashing any plan in its entirety as this could trigger a sizeable tax bill.

Consolidating your pension plans under one arrangement makes the management of the plan far simpler and reduces the administration. At Cullimore Dutton Solicitors, we take a proactive approach, reviewing your plans regularly to ensure they continue to meet your needs and proposing adjustments when necessary. You may be invested for a long period, in many cases for the rest of your life, therefore, taking a proactive approach should enhance the investment returns over the long term.

In addition, the more modern style pension plans normally offer far greater flexibility and enable you to pass the pension plan to a range of beneficiaries on death.

Pension plans are often your largest asset so we would recommend you take independent advice before making any decisions. There have been thousands in the UK who have been scammed and lost significant sums therefore it is imperative you receive regulated advice from a qualified person. 

You can check whether a firm is authorised to give such advice via the regulator FCA website www.fca.org.uk

If you would like to benefit from a free no obligation initial meeting to review your pension arrangements, or if there is anything else you would like to discuss then please get in touch with our Independent Financial Services team on 01244 356 789 or email info@cullimoredutton.co.uk

Please note: This article is provided for information only and must not be considered as financial advice. We always recommend that you seek independent financial advice before making any financial decisions.

The value of your investment can go down as well as up and you may get back less than the amount invested. There is no guarantee equal or higher income/returns will be achieved when compared to your existing arrangement’

 

 

 

 

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