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If you're approaching retirement age, you need to start thinking about how you'll maximise your pension savings to secure a retirement income. The pension freedoms launched in April 2015 mean it's even more important to make an informed decision, and the Government’s guidance service could help. But just what is Pension Wise, and how can you benefit from it? We've covered a few basics to get you started.
Pension Wise is the Government's free, impartial retirement guidance service that's open to everyone aged 50+ seeking information about how they can turn their pension fund (either a personal or workplace pension) into a retirement income. It aims to help pension savers understand their options, something that's particularly necessary given the current pensions landscape – retirees now have more choice than ever when it comes to spending their savings, and the complexity of the various products means it's vital to understand the options available.
Essentially, if you use the service, it outlines what you can do with your pension pot. It covers the rules and the various options, including leaving the money invested, taking an annuity or a lump sum, or generating a flexible income. It explains the tax implications of each, will help you work out how much money you'll need in retirement and explain how to avoid pension scams, and crucially, it'll tell you how to shop around to find the best product to suit your needs, and where to go for advice.
It can provide valuable information to those approaching retirement, but there's one key thing that will need to be remembered – the service merely offers guidance, not advice. It'll give a general overview of the options available, but it won't tell the individual what products could suit their needs or how they should spend their money. For this reason, Pension Wise should be seen as the first step on the route to securing an income rather than a one-stop-shop, with professional, tailored financial advice needing to be sought thereafter.
Knowing how you'll secure a retirement income is one of the most important decisions you'll ever make, particularly if you opt for a guaranteed income from an annuity, as this is a decision that can't be changed later. Your choice could determine the amount of income you'll receive for the rest of your life, which is why it's so crucial to fully understand the options available.
This, really, is why you might need Pension Wise. It may not offer regulated advice, but it can be a valuable first step that can help you understand the full range of options available, and will give you an idea of what to do next. You'll probably still want to speak to a professional financial adviser afterwards, but you'll be able to do so with a lot more information under your belt.
The service has been designed to offer three key methods of contact – face-to-face, over the phone, or online. The simplest option for many will be the online version, which can be accessed by heading to https://www.pensionwise.gov.uk/, but those who would prefer to speak to someone will still have that option.
Telephone guidance will be provided by The Pensions Advisory Service, while face-to-face guidance will be offered at selected Citizens Advice Bureau locations across the UK.
“Don’t leave it too late to contact Pension Wise, as deciding what to do with your pension pot should never be rushed. Give yourself plenty of time to consider the options before you retire so you stand the best possible chance of securing the retirement income that’s right for you, and make sure to seek professional financial advice to help.”
Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.