Pension Wise is good, but has limitations
Soon after George Osborne’s statement in the 2014 Budget that over-55s would have the benefit of greater freedoms around their pensions, the government has provided information on its free ‘advice’ service, which has also been introduced in last year’s Budget.
The service, which has been named Pension Wise, provides to people who meet the eligible age a ‘guidance guarantee’ appointment of 30-minutes with a pension advisor. The consultations can occur in person or over the phone and Pension Wise is going to be jointly administered by CAB and The Pension Advisory Service.
Whilst it is still welcome that the government provides any advice surrounding the new pension freedoms that will come into effect in April 2015 information regarding the Pension Wise service help to show the elevated need for genuine financial planning.
Although new Pension Wise advisors will provide ‘free and impartial information and guidance to retirees’, the service will be unable to provide ‘specific guidance on how to deal with a pension pot’. Which means people will not be given planning tailor-made for their personal circumstances, taking into consideration, attitude to risk and tax implication associated with particular plans or their desired life objectives in retirement.
For each individual, this may mean that they’re missing a number of planning options and so it remains to be seen if the Pension Wise 30-minute service can prepare people sufficiently for correctly preparing their pension expenditure. With full accessibility available to pension funds, careful planning is going to be necessary to make sure your pension savings lasts throughout your lifetime, and also making it possible to do everything that you might want to during retirement.
So that you can plan your retirement correctly along with a degree of certainty, we still feel that full financial advice will be the best option and for most it is vital, considering the upcoming pension freedoms. A complete financial plan with regards to your retirement should consider elements including the below plus more, and can help to provide you with an accurate forecast of your likely position in retirement.
Elements usually considered in complete financial planning
- consideration of big purchases you intend along with their effect on your financial situation
- the best way to utilise 25% tax-free ‘lump sum’
- your personal thoughts and attitude towards investment risk
- your personal tax situation
- any possible future care needs
- any inheritance possibilities
- state pension levels
- a full valuation on your complete assets, together with your pensions, savings, touchable assets plus more
your desired standard of living, your present living costs along with planned alterations