I have just completed some work for the chairman of a local charity I am treasurer of, which raised a few issues about how you research your pension options. Having contacted his pension provider, he was just about to cash his main pension in when he read the small print on the pack they sent him. The elephant in the room for Pension Freedom is the tax due to HMRC if you take your pension as cash; the bill for him could have been enough to buy a very nice, shiny car!
For someone looking for information on what to do when you get to retirement age or how to plan for a reasonable retirement, there are two major sources of information and many possible outcomes, so remember the words, “Guidance” and “Advice”, as they don’t mean quite what you think they should mean!
“Guidance” is free, available in various places and should give you the knowledge you need to select likely outcomes suitable for you. As a general rule, “Guidance” will help you decide what basic financial product ought to fit your needs, but it accepts no responsibility if there is an unfortunate consequence of your actions, or you have overlooked a better alternative. As a side effect, the knowledge gained should enable you to spot the difference between bad advice, OK advice and great advice.
“Advice” in this context is “Regulated Advice”, and depends on a financial adviser to select, not only the financial product you need, but right down to the specific provider, the options to select and will take you all the way to the end of the process, helping you complete the forms and exploring the consequences. “Advice” is not free; in cost terms, think of it as a major car service, solicitor’s or accountant’s time, but concentrate on the benefit received rather than the initial cost. Remember Sir Henry Royce’s dictum; “the quality will remain long after the price is forgotten”. In pensions, especially, the difference can be immense.
Finding guidance
A good place to start looking for guidance is the Money Advice Service. One web page summarises all of the sources of free guidance available, https://www.moneyadviceservice.org.uk/en/articles/free-financial-advice-your-options. For pensions specifically, the Pensions Advisory Service, (https://www.pensionsadvisoryservice.org.uk/), offers telephone, webchat and online enquiry services or via Pension Wise, (https://www.pensionwise.gov.uk/en), a government service, face to face appointments for those over 50 years old and with money purchase pensions. Good as they are, they will not actually arrange your retirement income, be it annuity, drawdown, Uncrystallised Funds Pension Lumps Sums, (UFPLS or “Ufflepuff”), final salary pension or some mixture of all of them.
Finding advice
Apart from the obvious, (me! www.martin-redmanpartners.co.uk ), you need to find an adviser you can work with for the long term, as the drawdown route is likely to take you to age 75, if not longer. If you use Google, search for “Independent Financial Advice” and a location. This should concentrate on regulated advisers but be cautious of marketing websites that sell your details on to people who buy leads, unregulated advisers and scam artists! There are two advice website aggregators we subscribe to, as part of our marketing, Unbiased and Vouched For.
Unbiased, www.unbiased.com, was set up originally to market independent financial advice to the general public by a trade body. Some leads passed to financial advisors are free but most are charged at less than £50. If you must go via an aggregator, then this one is as good as any; if you started from a provider’s website, this is the one most likely mentioned.
Vouched For, www.vouchedfor.co.uk, is set up to introduce IFAs, mortgage advisers, solicitors and accountants and all pay for the privilege. Depending on the service bought by the professional, they will be paying a retention fee and £80 and over for each lead passed on.
In my ideal world, all new prospective clients will ring me on 01223 792196 or 01664 233102 or message me via the website, www.martin-redmanpartners.co.uk. Then I spend less on marketing and can spend more time and attention on you.
The information contained is for guidance only and does not constitute financial advice. It is based on our understanding of UK legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly no responsibility can be assumed by Martin-Redman Partners its officers or employees, for any loss in connection with the content hereof and any such action or inaction.