New pension freedoms available to pension savers from April 2015 are seen in a largely positive light. However, as with all significant changes, especially those where the ropes are loosened, there is a requirement to add some structure to ensure that people don’t get carried away with a wider choice of options available.
One benefit: flexibility in managing your pension
Part of the 2015 pension reform includes the changes to how and when pension funds can be drawn down in retirement. From next month, those aged 55 or over will have the option to draw their pension, including, if they choose, a 25% lump sum…tax free.
The reform is aimed to encourage a greater level of investment into pension plans and open up new opportunities for pension products to develop in future years.
One risk: not enough income for retirement
The other side to consider is the risk more flexibility creates, one being a failure to provide enough income for the whole of their retirement.
Mis-sold or fraudulent products could become an issue so the importance of using a reputable financial adviser becomes even greater to ensure you are getting sound advice for your retirement.
“Medics Financial Services helped me put into place a retirement plan and gave me a full pensions overhaul. Thanks to the advice received, I now have high hopes of a comfortable retirement.”
Ms Olaitan, Consultant Gynaecologist
Safeguarding for pension savers
The Common Works and Pension committee are warning of the potential risks with the new pension freedoms and the importance of safeguarding the money of pensioners. An initiative that is being discussed is a pensions “watchdog” to protect the new pensions regime, amongst other ideas.