The pension reforms officially came into being in April, but amid all the hype and expectation, it wasn't widely publicised that not everyone would be able to take advantage of the new flexibilities. Pension providers aren't obliged to offer the full freedoms to their customers, and that means some people could miss out – or face additional costs in order to benefit.
Research from My Pension Expert has revealed that many pension providers aren't yet offering the complete set of pension freedoms. Some refuse to let retirees withdraw from their funds on an ad-hoc basis (the rule that could almost let you use your pension like a bank account), while others that are offering this freedom are charging hefty fees for the privilege.
It's also been reported that some providers aren't letting customers withdraw their pots in full, with anecdotal evidence suggesting that much of this could be due to fears of potential negligence claims if pensioners run out of cash in later life. Those that aren't being offered the full freedoms and who want to change provider could be stung there, too, as transferring to another scheme can come with yet more charges.
This highlights the need for pension savers to seek suitable advice before making any decisions, said Scott Mullen of My Pension Expert. Doing so will help ensure they're able to make the most of the new freedoms in any way they choose, be it through finding the right provider to switch to, or coming up with a solution that will meet their retirement needs.
"Additionally, an adviser will consider lifestyle and health factors that could enable the retiree to qualify for an enhancement and can therefore guarantee that they receive the best annuity rate available," said Mullen. "They will also offer advice on the taxation of withdrawals, making sure that the retiree pays as little as possible and at the same time is fully aware of the longevity risks of depleting a pension fund."
There's a lot to think about when it comes to securing a retirement income, and if you want to ensure you make the most of your years of saving, it makes sense to seek suitable advice. Start the process by getting free, impartial guidance from Pension Wise and consider taking the route to professional financial advice thereafter. Hopefully, even if you've been denied pension freedoms from your current provider, you'll find the solution that meets your needs.
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