General

Lifetime Allowance Reducing – Are you affected?

If you hold a pension pot equating to more than 1.25m then you need to act now to protect your future pension.

In April 2014 the Lifetime Allowance, which currently stands at 1.5m will be reduced to 1.25m. This will mean that those affected will be subject to a lifetime allowance tax charge on an extra £250,000 of their pension.

If this affects you, it is now time to explore a lifetime allowance protection scheme which works for you ensuring that you achieve the pension and retirement you have planned.  The most recent fixed protection schemes have been available for clients from August 2013 but it’s not too late to join and with the April deadline nearly upon us now is the time to act.

Don’t forget – the lifetime allowance test calculations for occupational and personal pensions are different.  If you are unsure whether or not you could be at risk please do not hesitate to call.

Call or Email us now for a  review of your pension and circumstances.

Would you like to guarantee part or all of your pension ?

Certain pension providers can offer you a range of guaranteed products in a part investment/part insurance retirement portfolio.  They allow you to choose from a number of risk-rated investments that include income or capital guarantees and protected growth funds.  While for many people these options will seem very attractive, certainly when contrasted with the limitations of standard annuities, you should consider the benefits they can have to your own circumstances before deciding to invest in one.  A review of the key advantages and disadvantages of pension guarantees might help make your decision.

Firstly, the design of the guarantee is that it should allow you to get at least as much out of your pension as you put into it.  The guarantee is a safeguard against common retirement concerns, like running out of money or losing money to poor investment performance.  Perhaps the most enticing reason to invest in a guarantee is that it allows you the opportunity to benefit from potential market growth in a way that traditional annuities don’t, while still protecting your existing pension.  The amount you invest is entirely up to you and you can guarantee all of your investment or just part of it.  There is also a choice of options to look at – you can choose the one that best suits your needs, whether it be a capital guarantee or an income guarantee.

The biggest drawback of a guarantee is that it will cost a not inconsiderable chunk of your pension pot.  The exact cost depends on where you decide to invest your money and what fund/s you invest in or, in the case of a capital guarantee, the term you opt for.  A financial advisor will be able to inform you of the cost before you set up the pension.  Also, you should be aware that guaranteed annuity rates may be lower than standard annuity rates on comparative pension funds.

There are a couple of other things to be wary of.  Firstly, cashing-in your guarantee, whether capital or income, will most likely mean your guarantees no longer apply and if your provider does not offer a guaranteed fund value you may get back less than your original premium.  Guarantees depend on the issuing insurance provider being able to pay them and if all of a sudden such a company were to no longer exist, it would likely affect their ability to honour the guarantee.

Please visit the Understand Your Pension website to find out more about your pension options or to request a callback.

Robert Van Der Does is freelance financial journalist.

New website launched to offer jargon-free pension advice

There may be many websites out there that offer advice on pension plans but many of them provide inaccurate information or simply baffle the website user with financial jargon.  This is why the Understand Your Pension website was launched recently to provide impartial and jargon-free advice on personal pensions.

The aim of the site is not only to provide information about the different kinds of pension available but also to help people who may already have a pension to gain a better understanding of the benefits associated with their pension.

To find out more about the pension advice on offer why not visit the Understand Your Pension website today and you can get a better understanding of your pension options.