The Association of British Insurers (ABI) has launched a campaign to help consumers understand their pension choices as they approach retirement, following numerous studies that have found a worrying lack of engagement with – and awareness of – the new options. Is it time you understood things a little better?
The 'Your Retirement, Your Choice' campaign is designed to help customers understand their choices in light of the pension reforms that will kick in on 6 April. It'll outline the changes taking place to ensure that consumers are fully informed, highlight where to get guidance (specifically, it'll point to the Government's Pension Wise service), give an overview of the options available, and provide consumers with the know-how to avoid becoming the target of pension scams.
Louise Hanson, director of advocacy at the ABI, said: "April 6 is the start of a pensions revolution, not a deadline to act. With greater pension freedoms and flexibility comes more responsibility to make the right choice. Don't be tempted to 'dash for the cash', but take time to carefully consider your options – especially as rising life expectancy means we can expect a longer retirement. The Government's Pension Wise service should be your first port of call to help you understand your options, and make the right retirement income decision."
Given that over half of those approaching retirement are unaware that the Pension Wise service even exists, according to research from MGM Advantage, it's hoped that this campaign will shed some light on the options available. It's widely expected that Pension Wise itself will start advertising more to encourage consumers to act, but don't wait – if you're approaching retirement, it's vital you understand the options as soon as possible.
In a nutshell, the reforms mean that, from age 55, you'll be able to access the money you have saved in your pension pot in a much more flexible manner. You won't have to buy an annuity (unless you want to), but could instead take the whole or part of your pot as cash, keep the money invested and draw a regular income from it (known as income drawdown), buy an annuity, or opt for a combination of the above.
However, although you've got more freedom when it comes to spending your pot, it isn't a decision you should make on your own. The increased number of options available means it's more important than ever to seek suitable advice, and your journey should start with Pension Wise. You'll probably want to do your own research, too – read our guide on pension freedoms to ensure you understand the risks as well as the benefits – but don't substitute Pension Wise for tailored, professional advice.
Knowing how to secure a retirement income is a wholly personal decision and will require careful consideration of your circumstances, so always speak to the professionals to get suitable support. If you're ready to consider your options, check out our no obligation annuity planner to get an idea of the solutions available, but above all, make sure you're fully aware of the changes taking place so you can make an informed decision.
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